Upcoming Event

Energy Economics & Finance Seminar

WednesdayFebruary 20, 2019 4:00 - 5:00 PM Kleinman | Free Event Register Here
Kleinman Center Classroom
220 S. 34th St. Fisher Fine Arts Building, Room 306
19104 Philadelphia , PA
United States
Pennsylvania US
Contact Information

If you are interested in attending, please contact:

Arthur van Benthem (arthurv@wharton.upenn.edu)

  • Louis Preonas
    Postdoctoral Scholar
    EPIC/Maryland ARE

Spatial Externalities in Groundwater Extraction: Evidence from California Agriculture

ABSTRACT: Groundwater is a common-pool resource essential for agricultural production. When farmers extract a marginal unit of groundwater, this lowers nearby groundwater levels and increases their neighbors’ groundwater pumping costs. This paper estimates farmers’ elasticity of demand for groundwater, in order to empirically investigate the magnitude of this spatial “pumping cost” externality. We assemble a novel dataset that combines (i) detailed microdata on farmers’ electricity consumption, (ii) rich data from technical audits of these farmers’ pump efficiencies, and (iii) publicly available measurements of groundwater depths in California aquifers. Using exogenous variation in electricity prices, we estimate farmers’ price elasticities of demand for both electricity (-1:17) and groundwater (1:12) to be much larger than previous estimates in the literature. We then calculate the extent to which each farm lowers its neighbors’ economic surplus by removing water from their shared aquifer. Our preliminary results suggest that the magnitude of the “pumping cost” externality is likely smaller than farmers’ private costs of groundwater pumping.

This seminar series in Energy Economics & Finance (EEF) is organized by Arthur van Benthem and hosted by the Kleinman Center.

The scope of the seminar includes regulation and policy papers. The scope of the seminar also includes environmental and transportation issues, as long as there is a connection with energy. Sessions are biweekly on Wednesdays (see dates below) from 4:00 p.m. – 5:00 p.m in the Kleinman Center classroom—Fisher Fine Arts Room 306.

Beer, wine, and snacks are served! For more information or to attend a session, please contact Arthur van Benthem (arthurv@wharton.upenn.edu).

Spring 2019 Schedule

2/20: Louis Preonas (EPIC/Maryland ARE)

3/20: Mathias Reynaert (Toulouse [Visiting MIT CEEPR])

4/3: Chris Severen (Philadelphia Fed)

4/17: Tatyana Deryugina (Illinois)

5/1: Gabrielle Vasey (Penn Econ)