Water, Water Somewhere: The Value of Water in a Drought-Prone Farming Region
Water is critical for agriculture, yet surprisingly few studies internationally have analysed the value placed on water in specific farming contexts. We do so using a rich longitudinal dataset for the Mackenzie District (Canterbury, New Zealand) over nineteen years, enabling us to extract the value placed by farmers on long-term access to irrigated water. New Zealand has a system of water consents under the Resource Management Act (RMA) that enables farmers with consents to extract specified quantities of water for agricultural purposes. Some water is extracted through large-scale irrigation infrastructure and other flows by more localised means; the RMA and the water consents themselves are a critical legal infrastructure underpinning farming. Using panel methods, we estimate property sale price and assessed value as a function of the size of the farm's water right (if it has one), farm characteristics, and the water right interacted with farm characteristics to determine how the value of a water consent varies according to local conditions. We find that flatter areas and areas with poorly draining soils benefit most from irrigation, possibly because the water is retained for longer on these properties. Drier areas appear to benefit more from irrigation than do areas with higher rainfall. Farms that are situated close to towns derive especially strong benefits from irrigation since these properties are most likely to have potential water-intensive land uses such as dairying and cropping that require access to processing facilities and/or an urban labour pool.
|Date of creation:||Jun 2008|
|Contact details of provider:|| Postal: Level 1, 97 Cuba Street, P.O. Box 24390, Wellington|
Web page: http://www.motu.org.nz
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Raymond B. Palmquist & Leon E. Danielson, 1989. "A Hedonic Study of the Effects of Erosion Control and Drainage on Farmland Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 55-62.
- Robert A Buckle & Kunhong Kim & Heather Kirkham & Nathan McLellan & Jared Sharma, 2002. "A structural VAR model of the New Zealand business cycle," Treasury Working Paper Series 02/26, New Zealand Treasury.
- Jan P. Crouter, 1987. "Hedonic Estimation Applied to a Water Rights Market," Land Economics, University of Wisconsin Press, vol. 63(3), pages 259-271.
- 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.
- Le, Rene Prou, 2007. "The Administration of New Zealand Irrigation: History and Analysis," Working Paper Series 3954, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
- John Faux & Gregory M. Perry, 1999. "Estimating Irrigation Water Value Using Hedonic Price Analysis: A Case Study in Malheur County, Oregon," Land Economics, University of Wisconsin Press, vol. 75(3), pages 440-452.
- Feng Xu & Ron C. Mittelhammer & Paul W. Barkley, 1993. "Measuring the Contributions of Site Characteristics to the Value of Agricultural Land," Land Economics, University of Wisconsin Press, vol. 69(4), pages 356-369.
- Le Prou, Rene, 2007. "The Administration of New Zealand Irrigation: History and Analysis," Working Paper Series 4341, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
- L. Allen Torell & James D. Libbin & Michael D. Miller, 1990. "The Market Value of Water in the Ogallala Aquifer," Land Economics, University of Wisconsin Press, vol. 66(2), pages 163-175.
- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
When requesting a correction, please mention this item's handle: RePEc:mtu:wpaper:08_10. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maxine Watene)
If references are entirely missing, you can add them using this form.