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Water Market Participation and Agricultural Land Values

Author

Listed:
  • Anita M. Chaudhry
  • Dean H. K. Fairbanks
  • Christoph Nolte

Abstract

Policies that improve drought resilience have heterogeneous effects on agricultural land values. We examine the value of surface water transfers and groundwater resources in a hedonic analysis of agricultural parcels in California. We find that parcels in irrigation districts, which engage in interbasin surface water transfers, experience an increase in value in subsequent years, but the gains are short-lived and unevenly distributed. Value of groundwater stock is higher in parcels outside irrigation districts. We also find that policies to restrict groundwater-substitution-based transfers, which aimed to reduce groundwater open-access externalities, have not been a deterrent against transfers in all areas.

Suggested Citation

  • Anita M. Chaudhry & Dean H. K. Fairbanks & Christoph Nolte, 2024. "Water Market Participation and Agricultural Land Values," Land Economics, University of Wisconsin Press, vol. 100(1), pages 127-147.
    • Handle: RePEc:uwp:landec:v:100:y:2024:i:1:p:127-147
    Note: DOI: https://doi.org/10.3368/le.100.1.102122-0091R
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    References listed on IDEAS

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    1. Ragan A. Petrie & Laura O. Taylor, 2007. "Estimating the Value of Water Use Permits: A Hedonic Approach Applied to Farmland in the Southeastern United States," Land Economics, University of Wisconsin Press, vol. 83(3), pages 302-318.
    2. Shan Ma & Scott M. Swinton, 2012. "Hedonic Valuation of Farmland Using Sale Prices versus Appraised Values," Land Economics, University of Wisconsin Press, vol. 88(1), pages 1-15.
    3. Wendong Zhang & Cynthia J. Nickerson, 2015. "Housing Market Bust and Farmland Values: Identifying the Changing Influence of Proximity to Urban Centers," Land Economics, University of Wisconsin Press, vol. 91(4), pages 605-626.
    4. Raymond B. Palmquist, 1989. "Land as a Differentiated Factor of Production: A Hedonic Model and Its Implications for Welfare Measurement," Land Economics, University of Wisconsin Press, vol. 65(1), pages 23-28.
    5. Hanemann, Michael, 2014. "Property rights and sustainable irrigation—A developed world perspective," Agricultural Water Management, Elsevier, vol. 145(C), pages 5-22.
    6. Daniel P. Bigelow & Jennifer Ifft & Todd Kuethe, 2020. "Following the Market? Hedonic Farmland Valuation Using Sales Prices versus Self-reported Values," Land Economics, University of Wisconsin Press, vol. 96(3), pages 418-440.
    7. Fritz M. Roka & Raymond B. Palmquist, 1997. "Examining the Use of National Databases in a Hedonic Analysis of Regional Farmland Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(5), pages 1651-1656.
    8. Daniel A. Brent, 2017. "The Value of Heterogeneous Property Rights and the Costs of Water Volatility," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(1), pages 73-102.
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    Cited by:

    1. Do, Ngoc Ha, 2025. "The Economic Benefits of Water Rights Adjudication: Evidence from Agricultural Land Sales in Western States," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 361196, Agricultural and Applied Economics Association.

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    More about this item

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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