Climate and irrigated agriculture: Evidence from cash rents (Job Market Paper)
We use county-level cash rent prices for irrigated and nonirrigated land to evaluate the relationship between temperature and agricultural production value in the context of changing water supplies due to reduced snowpack. Cash rents reflect expectations about profits and allow for a Ricardian analysis of impacts that account for adaptation strategies by producers. At the same time, cash rents are less subject to non-farm factors as described in Ortiz-Bobea (2020). While irrigation allows for a greater range of adaptation strategies through a diverse mix of high value crops, it is in many cases limited to water supplies stored as snowpack, a situation common in the western U.S. as well as parts of Europe and South America. We use cross-sectional variation in rents to estimate the effect of temperature on production value. To account for water supplies, we use a novel panel dataset to estimate water use as a function of precipitation and snow-water equivalent in each county’s watershed. Our results provide insight into the extent of water supply issues facing irrigated agriculture in arid regions as temperature increase.
On the frontier of water rights: Forfeiture then and now
Forfeiture of water is an important limitation on water rights in the western United States, where the right to water is allocated in order of the seniority of the water right. While often criticized in the modern context for incentivizing wasteful water use and increasing transaction costs, forfeiture served an important function during the establishment of the western frontier of the United States. We develop a theoretical model of water property rights that differs from analogous approaches in other property rights in that the maintenance cost of the right involves the use of the resource itself. This has broad implications for the optimal forfeiture period, particularly in the current setting of increasing water demand. A crucial factor is the degree of abandonment of claims, which plays a role during the initial allocation of the resource but diminishes as rights are more firmly established and the value of water increases. While a longer forfeiture period may be more optimal in the present, institutional path dependency plays a role in limiting current responses.
Property rights and the relationship between conflict and drought
Recent work investigating the effect of drought on conflict has focused on the extent to which drought affects the risk of small scale sub-national conflict between groups (Almer et al. 2017; Harrari and La Ferrara, 2017). While estimating the causal effect of drought on small scale conflict is important, understanding the mechanisms that drive that relationship can help societies manage their water resources and mitigate any risk of conflict. Societies that successfully manage scarce resources may weather the storm. Half of all small-scale conflicts in our sample occur in just ten countries, suggesting that variation at the country level plays an important role in determining the risk of conflict as a response to drought. One such role may be property rights for water. Well-defined property rights can help to govern access and facilitate coasian negotiation and legal recourse. Yet rights that exclude groups may also act to increase conflict. In this paper we examine how property rights work to mitigate drought-induced conflict in Africa and Latin America. In our primary analysis, we employ a random effects model specified to allow for property right variation at the country level while also estimating the “within” effects of drought on small scale conflict. Preliminary results suggest that while drought has an effect on the risk of conflict, variation between countries plays an important role. Some evidence exists that stronger private property rights, especially when providing for traditional ownership by indigenous peoples, reduce the likelihood of conflict.