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The Value of Water Storage: Evidence from California’s Kern Water Bank

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  • Lachhab, Rania
  • Bruno, Ellen

Abstract

Water banking has gained increasing policy attention as a means to mitigate drought risk and enhance long-term water security, yet assessing its economic value remains challenging. We estimate the value of groundwater storage with a hedonic analysis of the Kern Water Bank in California, which created spatial variation in access to storage based on whether a parcel was located within a participating water district. Using a dataset of agricultural land transactions from Kern County, CA and surrounding areas spanning 1984 to 2021, we find that access to the Kern Water Bank meaningfully increased land values, with a 15% increase in the per-acre price of parcels within participating water districts relative to those outside following the start of the bank. These findings underscore the substantial economic benefits of intertemporal water reallocation, with policy implications for agricultural regions facing growing water scarcity and climate variability.

Suggested Citation

  • Lachhab, Rania & Bruno, Ellen, 2026. "The Value of Water Storage: Evidence from California’s Kern Water Bank," 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri 404731, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea26:404731
    DOI: 10.22004/ag.econ.404731
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    References listed on IDEAS

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