Essays on the economics of salinity in irrigated agriculture

Abstract

Salinity has become a major concern in irrigated agriculture. Degraded water quality due to salinity threatens agricultural sustainability by limiting agricultural productivity and profitability. The natural intrusion of saltwater into aquifers is one reason for salinity, yet groundwater overpumping for irrigated agriculture, and regional climate and hydrology conditions have compounded such salinity challenges. The sustainability of irrigated agriculture in a saline environment depends on an accurate understanding of the effects of salinity and potential methods of adaptation. This dissertation contains three chapters providing insights into how salinity impacts agricultural decisions and land values. These insights are obtained by analyzing two regions, the High Plains Aquifer in central Kansas and the Central Valley Aquifer in California. The first chapter examines the impact of groundwater salinity on farmers’ main irrigation decisions by estimating the response along the extensive (i.e., irrigated acres), direct intensive (i.e., water application depth), and indirect intensive (i.e., crop choice) margins. Econometrics models are estimated using observed farmer behavior in response to exposure to different groundwater salinity levels using field-level panel data in a region of Kansas during 1991–2014. Results demonstrate that farmers facing salinity adjust their water use through all three margins, but most of the decrease in water use due to higher salinity is through the extensive margin. The second chapter evaluates the impact of groundwater salinity on agricultural land values with a unique dataset of parcel sale prices during 1988–2015 in a region of Kansas. I estimate hedonic regression models that control for spatial heterogeneity using either county fixed-effects or a nonlinear function of the geographic coordinates. The results demonstrate that groundwater salinity negatively impacts land values. These estimates can be interpreted as the economic damages from salinity, or equivalently, farmers’ willingness-to-pay to offset salinity. The third chapter quantifies the adaption to soil salinity by farmers in California’s Western San Joaquin Valley by econometrically estimating how farmers change crop choices in response to different soil salinity levels. I use high-resolution remotely-sensed soil salinity and crop data during 2007–2016. My estimates show that as the level of salinity increases, the probability of growing salt-tolerant crops increases. This suggests that farmer’ adapt to salinity according to the degree of salinity. However, my estimates may have some endogeneity bias since crop choice affects the amount of water applied, which could affect the amount of soil salinity.