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.

"What Holds Back Water Markets? Transaction Costs and the Gains from Trade"
(Revise and resubmit, Review of Economics and Statistics)

This paper estimates the potential benefits of reducing transaction costs in California’s wholesale surface water market. I develop an empirical framework to analyze welfare in water markets that uses transactions data, inferring preferences of water utilities from their behavior in the existing market. I separate observed prices into true valuations and transaction costs, estimate demand elasticities, and simulate a market without transaction costs. Gains from efficient trading across regions and sectors are less than 2% of statewide water expenditures. Reducing transaction costs may not achieve large gains without also reforming the policies and institutions that govern local water allocation.

(Older version from 2019)

"Industrial Water Pollution and Agricultural Production in India" with Anshuman Tiwari
(Revise and resubmit, Journal of the Association of Environmental and Resource Economists)

Industrial water pollution is high in many developing countries but often receives less attention than air and domestic water pollution. We estimate the costs of industrial water pollution to 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. First, we show that these sites do coincide with a large, sudden rise in pollutant concentrations in the nearest river. Then, we find that a remote sensing measure of crop yields is no lower in villages immediately downstream of polluting sites, relative to villages upstream of the same site in the same year. Downstream farmers switch irrigation sources from rivers and canals to wells in some specifications, suggesting costly input substitution may avert pollution damages. Damages to agriculture may not represent a major cost of water pollution, though many other social costs are not yet quantified. 

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.

(Original study design from 2018)

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.

We study the regulation of open-access resources under long implementation horizons. First, we formally clarify when and how future regulation induces 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. Open-access resources face a lower risk of perverse incentives, but a long lead time alone does not necessarily produce a smooth transition.

"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.


"Market Power in California’s Water Market" with Françeska Tomori, Erik Ansink, Harold Houba, and Charles Bos (2023). American Journal of Agricultural Economics, published online October 28.

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.