Research
WORKING PAPERS
This paper studies the long-run effects of surface water scarcity in irrigated agriculture and the extent of adaptation. First, I estimate the long-run effects of persistent differences in water supplies using spatial discontinuities between neighboring water utilities in California. Then, I measure adaptation by comparing these long-run effects with the short-run effects of weather-driven fluctuations in annual water supplies. Water scarcity reduces crop area and crop revenue (as predicted by crop choice) in both the short run and the long run. Differing crop substitution patterns reveal that farmers adapt but in ways that do not offset the lost production.
"Industrial Water Pollution and Agricultural Production in India" with Anshuman Tiwari
(Conditionally accepted, Journal of the Association of Environmental and Resource Economists)
We study how industrial water pollution affects agriculture in India, focusing on 48 industrial sites identified by the central government as “severely polluted.” We exploit the spatial discontinuity in pollution concentrations that these sites generate along a river, comparing villages immediately downstream and upstream of each site. To overcome data limitations, we use hydrological modeling to compute spatial relationships and machine learning to predict crop yields from satellite data. We find a large, sudden rise in pollutant concentrations in nearby rivers downstream of sites, but we do not detect lower crop yields on average. Yields do fall in specific areas, but aggregate impacts are small. Likely reasons are that not all farms are exposed, pollution dilutes before reaching crops, and industrial effluent can include beneficial nutrients. Water pollution may have other major social costs, but damages to agriculture is probably not one of them.
"Transaction Costs and the Gains from Trade in Water Markets"
(Revise and resubmit, Review of Economics and Statistics)
This paper estimates the potential benefits of reducing transaction costs in California’s surface water market. I develop an empirical framework to analyze welfare in a water market that uses transactions data, inferring the preferences of water districts from their prior behavior. I separate observed prices into demand and transaction costs and then simulate a market without transaction costs. Gains from efficient trading are $224 to $614 million per year, with larger gains in dry years. Physical conveyance costs prevent further gains, making some price dispersion inevitable. Contracting and regulatory reviews impose transaction costs that policy reform can alleviate.
"Anticipatory Effects of Regulating the Commons" with Ellen Bruno
(Revise and resubmit, Journal of Environmental Economics and Management)
We study the regulation of common-pool resources under long implementation horizons. First, we show that future regulation can induce either anticipatory compliance or perverse incentives to accelerate extraction (a “Green Paradox”). Then, we evaluate the early effects of a major groundwater regulation in California that does not yet bind. We assemble new data and compare within pairs of neighboring agencies that face varying restrictions on extraction. Differences in future regulation do not affect measures of water-intensive investments or groundwater extraction today, and this lack of anticipatory response in either direction can be explained by time preferences. Common-pool resources face a lower risk of perverse incentives than excludable resources like oil, but a long lead time alone does not necessarily produce a gradual transition.
Groundwater is a vital input to agricultural production worldwide, but a widespread lack of effective regulation leads to overconsumption and depletion. We evaluate a program of price incentives for voluntary groundwater conservation among smallholder farmers in Gujarat, India, where water (and the electricity used to pump it) is scarce and unregulated. To do so, we install meters and offer payments for reduced groundwater pumping in a randomized controlled trial. Price incentives work: The program reduced hours of irrigation by 24 percent. Most of the conservation is achieved by a price within a realistic policy range; doubling the price has little additional effect. Payment expenditures per unit energy conserved are near the cost of expanding electricity supply, suggesting that payments for groundwater conservation may be a cost-effective policy tool where pricing is politically infeasible.
Adaptation to environmental change can carry negative externalities. We document one such case: farmers in California respond to heat and drought by extracting more groundwater, harming access to drinking water for nearby residents. Using yearly variation we show that surface water scarcity and heat increase agricultural well construction, groundwater depletion, and domestic well failures, and that well construction accounts for a large share of the latter effects. In our setting, adaptation also exacerbates inequality. Effects on domestic well failures are concentrated in low-income and Latino communities. Climate damage estimates may be incomplete without accounting for the external costs of adaptation.
"The Tradeoff Between Wildlife Conservation and Renewable Energy: Evidence from Golden Eagles and Wind Turbines" with Brock O'Brien (former MSU master's student)
(Revise and resubmit, Land Economics)
Renewable energy development can reduce carbon emissions but can also harm wildlife, posing a tradeoff between local conservation and global climate goals. This paper estimates the effect of protections for golden eagles on wind energy development in the central United States. Federal enforcement of the Bald and Golden Eagle Protection Act sharply increased after a key court decision in 2013, increasing potential liability for wind developers in regions where golden eagles are common. We find that counties with high exposure to golden eagles slowed their wind energy development after 2013 relative to counties with few to no golden eagles. The forgone wind energy would have brought either $140 million in new electricity or $57 million in climate benefits. The quantifiable benefits from avoided eagle fatalities appear considerably lower. Our results suggest that current policy, at least at the margin, overvalues wildlife protection and undervalues green energy.
PUBLICATIONS
"Market Power in California’s Water Market" with Françeska Tomori, Erik Ansink, Harold Houba, and Charles Bos (2024). American Journal of Agricultural Economics 106(3): 1274–1299.
We estimate market power in California's surface water market. Market power may distort the potential welfare gains from water marketing. We use a Nash-Cournot model and derive a closed-form solution for the extent of market power in a typical water market setting. We then use this solution to estimate market power in a newly assembled dataset on California's water economy. We show that, under the assumptions of the Nash-Cournot model, market power in this thin market is limited.
"The Political Economy of Groundwater Management: Descriptive Evidence from California" with Ellen Bruno and Arthur Wardle (2023). In: Ariel Dinar and Gary Libecap, ed., American Agriculture, Water Resources, and Climate Change, National Bureau of Economic Research, University of Chicago Press.
We use California's Sustainable Groundwater Management Act (SGMA), a statewide framework for local institutional change, to study the drivers of collective action and policy instrument choice over groundwater. We evaluate how SGMA altered the bargaining environment, place it in the context of the literature on the political economy of common-pool resource management, and characterize cross-sectional patterns in proposed demand management strategies. We find that by reducing the costs of collective action, SGMA brought about a significant departure from the prior status quo of open access, with a majority of basins now proposing incentive-based policies for groundwater management. Understanding the political economic forces that explain how, where, and why management is occurring is critical to the sustainability of groundwater-dependent agricultural regions worldwide.