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Surface water supplies are becoming increasingly strained, pushing policy makers to find solutions to facilitate reductions in water use though there is limited evidence on how farmers respond to policy induced variation in surface water supplies. This paper uses a difference-in-differences framework to compare the response of farmers to a bundle of policies reducing deliveries from the Colorado River by 35%. I find that on average, farmers reduce the amount of land planted but plant more water intensive crops leading to a minimal reduction in total estimated water use compared to the counterfactual. Additionally, there is strong suggestive evidence that farmers are using groundwater to offset a significant amount of the surface water loss. These findings have important consequences for understanding the relative trade-offs policy makers face when implementing policies that protect surface water sources. [ABSTRACT FROM AUTHOR]

Agricultural producer participation and spatial coordination of land use decisions are key components for enhancing the effective delivery of ecosystem services from private land. However, inducing participation in Payment for Ecosystem Services schemes for coordinating land management choices is challenging from a policy design perspective owing to transaction costs associated with participation. This paper employs a laboratory experiment to investigate the impact of such costs on participation and land use in the context of an Agglomeration Bonus (AB) scheme. The AB creates a coordination game with multiple Nash equilibria related to alternative spatially-coordinated land use patterns. The experiment varies transaction costs between two levels (high and low), which affects the risks and payoffs of coordinating on the different equilibria. Additionally, an option to communicate is implemented between neighbors arranged on a local network to facilitate spatial coordination. Results indicate a significant difference in participation and performance under high and low transaction costs, with lower uptake and performance when transaction costs are high. These effects are, however, impacted by transaction costs faced in the past. Communication improves both AB participation rates and performance with the effect being greater for participants facing high transaction costs. [ABSTRACT FROM AUTHOR]

This paper investigates the social costs of second-best agricultural greenhouse gas (GHG) mitigation policies. Adjustments along the land use and input intensity margins are represented within a regionalized optimization model of California crop production calibrated to economic and agronomic information. Second-best policies relying on spatially aggregated GHG emission factors lead to small abatement efficiency losses, while policies targeting a single GHG lead to moderate losses. In contrast, policies targeting a single input entail large abatement efficiency losses, which nonetheless can be reduced by combining instruments. [ABSTRACT FROM AUTHOR]

While there is considerable interest in understanding the climate–migration relationship, particularly in the context of concerns about global climatic change, little is known about its underlying mechanisms. In the paper, we combine a rich panel data on annual bilateral international migration flows with an extensive data on climate variability across the countries to investigate in-depth the climate–migration link. We find a positive and statistically significant relationship between temperature and international outmigration only in the most agriculture-dependent countries, consistent with the widely documented adverse impact of temperature on agricultural productivity. Further, the temperature–migration relationship is nonlinear and resembles the nonlinear temperature–yield relationship. In addition, migration flows to current major destinations are especially temperature-sensitive. Policies to address issues related to climate-induced international migration would be more efficient if focused on the agriculture-dependent countries and especially people in those countries whose livelihoods depend on agriculture. [ABSTRACT FROM AUTHOR]

This paper attempts to fill a gap in a growing literature examining the global economic implications of weather shocks. Past research has found significant, robust impacts of hotter temperatures on reducing economic growth. While rainfall is important for agriculture, impacts on aggregate economic activity remain elusive. In this paper, I argue that rainfall is a poor indicator of water availability, particularly in urban contexts. Instead, I find that changes in water runoff significantly impact economic growth. Results show that years in which runoff is significantly lower than average, local economic activity growth is depressed. This impact is strongest in middle-income regions, where runoff 1 or 2 standard deviation below normal levels reduces GDP growth by 0.4–0.6% and 1.3–2.5%. I examine two mechanisms, agricultural production and hydropower dependence. Globally, agricultural production is depressed by below average runoff shocks, although the resulting impact on GDP is likely low. Regions which are more urban and rely more on hydropower production in their energy mix are significantly more sensitive to these runoff shocks. With climate change expected to increase the variability of water runoff, these shocks are expected to become more frequent in the future and in some regions may significantly hamper growth. [ABSTRACT FROM AUTHOR]

Abstract: This paper develops an integrated model of the fuel and agricultural sectors to analyze the welfare and greenhouse gas emission (GHG) effects of the existing Renewable Fuel Standard (RFS), a Low Carbon Fuel Standard (LCFS) and a carbon price policy. The conceptual framework shows that these policies differ in the incentives they create for the consumption and mix of different types of biofuels and in their effects on food and fuel prices and GHG emissions. We also simulate the welfare and GHG effects of these three policies which are normalized to achieve the same level of US GHG emissions. By promoting greater production of food-crop based biofuels, the RFS is found to lead to a larger reduction in fossil fuel use but also a larger increase in food prices and a smaller reduction in global GHG emissions compared to the LCFS and carbon tax. All three policies increase US social welfare compared to a no-biofuel baseline scenario due to improved terms-of-trade, even when environmental benefits are excluded; global social welfare increases with a carbon tax but decreases with the RFS and LCFS due to the efficiency costs imposed by these policies, even after including the benefits of mitigating GHG emissions. [Copyright &y& Elsevier]

Abstract: Encouraging the use of more efficient irrigation technology is often viewed as an effective, politically feasible method to reduce the consumptive use of water for agricultural production. Despite its pervasive recommendation, it is not clear that increasing irrigation efficiency will lead to water conservation in practice. In this paper, we evaluate the effect of a widespread conversion from traditional center pivot irrigation systems to higher efficiency dropped-nozzle center pivot systems that has occurred in western Kansas. State and national cost-share programs subsidized the conversion. On an average, the intended reduction in groundwater use did not occur; the shift to more efficient irrigation technology has increased groundwater extraction, in part due to shifting crop patterns. [Copyright &y& Elsevier]

Abstract: A carbon tax on fuel would penalize carbon intensive fuels like gasoline and shift fuel consumption to less carbon intensive alternatives like biofuels. Since biofuel production competes for land with agricultural production, a carbon tax could increase land rents and raise food prices. This paper analyzes the welfare effect of a carbon tax on fuel consisting of gasoline and biofuel in the presence of a labor tax, with and without a biofuel subsidy. The market impacts of a carbon tax are also compared with that of a subsidy. Findings show that if a carbon tax increases biofuel demand, the tax interaction effect due to higher fuel prices is exacerbated by higher land rent and food prices and greater erosion of the carbon tax base. Thus, the second best optimal carbon tax for fuel is lower with biofuel in the fuel mix, especially if biofuel is subsidized. [Copyright &y& Elsevier]

Climate change effects on agricultural yields will be uneven over the world. A few countries, mostly in high latitudes, may experience gains, while most will see average yield decrease. This paper aims to quantify the role of market-mediated adjustments in attenuating the effects of climate change by allowing the expression of the new climate-induced pattern of comparative advantages within and between countries. To do this, we develop a quantitative general equilibrium trade model where the representation of land use choice is inspired from modern Ricardian trade models. We use spatially explicit information from the agronomic literature about potential yields before and after climate change for calibration and counterfactual simulations. The results show that the climate-induced yield changes generate large price movements that incentivize adjustments in production and trade. Both production and trade adjustments contribute to reducing welfare losses globally, with production adjustments making the larger contribution. [ABSTRACT FROM AUTHOR]

This paper studies the underlying relationship between agricultural productivity and deforestation by analyzing the impacts of a large fertilizer and seed subsidy program in Malawi. In the absence of well-defined subsidy eligibility criteria, we demonstrate that areas with a high proportion of individuals of the same ethnicity as the president received more subsidized fertilizer and deforested less compared to areas with other predominant ethnicities. We provide evidence that subsidized fertilizer increased yields and reduced pressure to expand agriculture and that the findings are not confounded by increases in public sector employment or other public assistance programs. The results suggest that policies aimed at increasing small-scale agricultural productivity may have positive environmental spillovers. [ABSTRACT FROM AUTHOR]