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The Importance of Well Yield in Groundwater Demand Specifications

Author

Listed:
  • Taro Mieno
  • Mani Rouhi Rad
  • Jordan F. Suter
  • R. Aaron Hrozencik

Abstract

Implementing effective resource management policies critically depends on accurate estimates of the price elasticity of resource demand. In the case of groundwater, previous research estimating well-level groundwater demand has largely neglected the importance of well yield, which is a physical limit on the rate of groundwater extraction. In this study, we empirically estimate the price elasticity of demand for groundwater using well-level data from Colorado. Our results demonstrate that when well yield is omitted, price elasticity is overestimated. This in turn creates inaccurate predictions of the effect of price-based conservation policies on groundwater use and welfare.

Suggested Citation

  • Taro Mieno & Mani Rouhi Rad & Jordan F. Suter & R. Aaron Hrozencik, 2021. "The Importance of Well Yield in Groundwater Demand Specifications," Land Economics, University of Wisconsin Press, vol. 97(3), pages 672-687.
    • Handle: RePEc:uwp:landec:v:97:y:2021:i:3:p:672-687
    Note: DOI: 10.3368/wple.97.3.030320-0031R1
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    Cited by:

    1. R. Aaron Hrozencik & Dale T. Manning & Jordan F. Suter & Christopher Goemans, 2022. "Impacts of Block‐Rate Energy Pricing on Groundwater Demand in Irrigated Agriculture," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(1), pages 404-427, January.

    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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