Quantifying the impact of water policy: measuring adaptations of a stakeholder-led irrigation water management plan in Kansas using difference-in-differences

Abstract

The goal of this research is to identify the effects of a local collective action management plan on irrigators in Kansas. I compare changes in water use decisions of irrigators located inside the policy boundary to changes in water use decisions of irrigators located within a five mile buffer surrounding the Sheridan County 6 Local Enhanced Management Area (LEMA). I use a Difference-in-Difference regression model to estimate the effects of the LEMA on irrigated acreage, irrigation intensity, and crop type to uncover the adaptation strategies adopted by farmers. I also estimate how the LEMA impacted crop yields and the use of agricultural inputs such as herbicides, pesticides, fertilizer, and seed. The key assumption for the empirical model is that irrigation decisions inside the LEMA boundary would have followed the same trend as those in the 5 mile boundary if the LEMA water use restriction had not been in place. The change in total water use is decomposed into three adjustments: changes in irrigated acreage (extensive margin), changes in applied water intensity on the same crop (direct intensive margin), and changes in crop allocations (indirect intensive margin). My results indicate that the LEMA caused a reduction in total water use of 25%. The total change in water use was due to a 4% reduction at the extensive margin, 19% at the direct intensive margin and 3% at the indirect intensive margin. The LEMA resulted in an 8% reduction in corn yield and a 4% reduction to soybean yield, the primary crops in the region. I further estimate that the changes in cropping patterns due to changes at the extensive margin result in a 15% reduction in agricultural input expenditures through changes in cropping patterns. This study improves our understanding of the effects of this type of policy and provides implications for future water policy management initiatives. Global considerations of depleted groundwater resources have become of greater concern and initiatives such as the Sheridan County 6 LEMA could offer alternative strategies for effective resource management through a collective action management plan led by farmers and legally enforceable by the state.