The next lunch and learn is Thursday 1/17 from 12:30 to 1:30 pm in
Saieh 146. Our speaker, Louis Preonas, is a postdoctoral scholar in
the Department of Economics and the Energy Policy Institute. He will
present his work on the elasticity of demand for agricultural
groundwater — more details are provided below. We hope to see you
Title: Spatial Externalities in Groundwater Extraction: Evidence from
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
To present, contact Sunny (firstname.lastname@example.org) or Osamu (email@example.com)
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