Comparing the Cost-Effectiveness of Water Conservation Policies in a Depleting Aquifer: A Dynamic Analysis of the Kansas High Plains

Abstract

This research analyzes two groundwater conservation policies in the Kansas High Plains located within the Ogallala aquifer: 1) cost-share assistance to increase irrigation efficiency; and 2) incentive payments to convert irrigated crop production to dryland crop production. To compare the cost-effectiveness of these two policies, a dynamic model simulated a representative irrigator's optimal technology choice, crop selection, and irrigation water use over time. The results suggest that the overall water-saving effectiveness can be improved when different policy tools are considered under different conditions. High prevailing crop prices greatly reduce irrigators' incentive to give up irrigation and therefore cause low enrollment and ineffectiveness of the incentive payment program. In areas with low aquifer-saturated thickness, the incentive payment program is more effective, whereas in areas with relatively higher water availability, the cost-share program could be a better choice.

The Influence of on- And Off-Farm Surface Water Investment on Groundwater Extraction From an Agricultural Landscape

“…A large literature exists on groundwater management to slow the rate of withdrawals that include payments to convert irrigated crop production to nonirrigated crop production (Ding and Peterson, 2012), tradable groundwater permits (Kuwayama and Brozović, 2013), and cost share for the adoption of irrigation practices (Huffaker and Whittlesey, 1995). However, the influence of surface water storage on the long-run depletion of the aquifer and the change in crop mix is mostly unexplored.…”

The Impact of Irrigation Capital Subsidies on Common-Pool Groundwater Use and Depletion: Results for Western Kansas

“…Many models of irrigation technology adoption are realistic in the sense that they model the discrete choice among commercially available irrigation technologies as in Caswell and Zilberman (1985) or as in Ding and Peterson (2012) where the choice is determined by the levels of expected profits under different irrigation technologies given current aquifer conditions. Caswell and Zilberman (1985) considers both water and non water costs associated with each irrigation system but does not explicitly include the upfront investment level while Ding and Peterson (2012) explicitly includes the upfront cost of each irrigation technology and compares it to the net present value of expected benefits in their irrigation technology choice model.…”

Effects of Recent Corn and Energy Prices on Irrigation Investment in the Humid Climate of Tennessee

“…Economies of scale for the investment cost of an irrigation system were found for the three field sizes, which has important implications for profitability of the investment. We assumed that the center-pivot system had a 20-year useful life and zero salvage value, which follows the assumptions of Ding and Peterson (2012) and Guerrero et al (2010). We also assumed that the producer financed the cost of the well and system over 5 years at a 5% interest rate, which is what Guerrero et al (2010) used.…”