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Farm Profitability And Burec Water Subsidies: An Lp Look At A Region

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  • CARLOS A. ULIBARRI
  • HARRY S. SEELY
  • DAVID B. WILLIS

Abstract

Most studies of irrigation water subsidies focus on farmers' “ability‐to‐pay” for irrigation‐related construction costs without questioning the methods used to subsidize these costs. This article shows how BUREC water subsidies could be eliminated by increasing federal water and power rates on long‐term irrigation contracts. The welfare effects of this “desubsidization” are examined for California's San Joaquin Valley, which uses federal power for groundwater pumping and the conveyance of surface water. A linear programming model provides estimates of the change in farm profitability from imposing full‐cost federal water and power rates. The desubsidization has a disproportionate impact on growers of water intensive crops while benefiting non‐agricultural power users and the U.S. Treasury. This points to the conclusion that charging full‐cost rates would redistribute $4.58 million of profit‐income per year without significant regional impacts on growers.

Suggested Citation

  • Carlos A. Ulibarri & Harry S. Seely & David B. Willis, 1998. "Farm Profitability And Burec Water Subsidies: An Lp Look At A Region," Contemporary Economic Policy, Western Economic Association International, vol. 16(4), pages 442-451, October.
  • Handle: RePEc:bla:coecpo:v:16:y:1998:i:4:p:442-451
    DOI: 10.1111/j.1465-7287.1998.tb00532.x
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    File URL: https://doi.org/10.1111/j.1465-7287.1998.tb00532.x
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    References listed on IDEAS

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    1. Margriet Caswell & David Zilberman, 1985. "The Choices of Irrigation Technologies in California," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(2), pages 224-234.
    2. David Zilberman & Neal Macdougall & Farhed Shah, 1994. "Changes In Water Allocation Mechanisms For California Agriculture," Contemporary Economic Policy, Western Economic Association International, vol. 12(1), pages 122-133, January.
    3. Margriet F. Caswell & David Zilberman, 1986. "The Effects of Well Depth and Land Quality on the Choice of Irrigation Technology," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(4), pages 798-811.
    4. Watson, William D. & Nuckton, Carole Frank & Howitt, Richard E., 1980. "Crop Production and Water Supply Characteristics of Kern County," Information Series 263853, University of California, Davis, Giannini Foundation.
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    Cited by:

    1. Schmidt, Stefan & Seppelt, Ralf, 2018. "Information content of global ecosystem service databases and their suitability for decision advice," Ecosystem Services, Elsevier, vol. 32(PA), pages 22-40.
    2. Moore, Madison, 2015. "The Economics of Water: The Effects of Irrigation on Average Farm Revenue," SS-AAEA Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 2015, pages 1-13.
    3. Miguel Ángel Gutiérrez Andrade & Francisco Venegas Martínez & Hector Manuel Bravo Pérez, 2005. "Política fiscal en el manejo de los recursos hidráulicos: Un modelo de equilibrio general computable," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 20(2), pages 219-261.
    4. Qureshi, Muhammad Ejaz & Wegener, Malcolm K. & Qureshi, S.E. & Mason, F.M., 2002. "Implications of alternative mill mud management options in the Australian sugar industry," 2002 Conference (46th), February 13-15, 2002, Canberra, Australia 125149, Australian Agricultural and Resource Economics Society.

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