Energy Economics & Finance Seminar
If you are interested in attending, please contact:
Jen Jones (firstname.lastname@example.org)
- Louis PreonasMaryland
Title: "Groundwater, Energy, and Crop Choice"
ABSTRACT: Groundwater is a key resource for agricultural production globally. Both increasingly rapid drawdowns of aquifers as well the policies intended to increase aquifer sustainability increase costs to agricultural producers, with unknown consequences. In this paper, we provide the first large-scale empirical estimates of how farmers respond to changes in groundwater costs in one of the world’s most valuable agricultural areas: California. To do this, we assemble a novel dataset that combines (i) detailed restricted-access microdata on farmers’ electricity consumption, (ii) rich data from technical audits of these farmers’ pump efficiencies, (iii) measurements of groundwater depths in California aquifers, and (iv) satellite-derived measures of crop cover. For identification, we leverage exogenous variation in the price of electricity, a key marginal input into the groundwater production function. We find that farmers are very price responsive: we estimate large price elasticities of demand for electricity (−1.17) and groundwater (−1.12). We demonstrate that crop switching and fallowing are the main channel through which farmers respond to increases in groundwater costs. Using a discrete choice model, we estimate that a counterfactual $10 per-acre-foot groundwater tax—approximately the price increase required to meet California’s sustainability targets—would lead farmers to reallocate 3.9 percent of cropland, with increases in fallowing and high-value fruit and nut perennials, and decreases in annual crops and low-value perennials.
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. Please register for detail for how to join to webinar.
To register: email Jen Jones to recieve the zoom log-in information.
Fall 2020 Schedule:
- 9/9 Susanna Berkouwer (Wharton BEEP)
- 9/23 Frank Diebold (Penn Econ)
- 10/7 Arthur van Benthem (Wharton BEPP)
- 10/21 Louis Preonas (Maryland)
- 11/4 Jacquelyn Pless (MIT Sloan)
- 11/18 Jim Archsmith (Maryland)