Date of this Version
2017 by Mani Rouhi-Rad, Timothy Foster and Nicholas Brozovi ́c.
Existing literature in economics and engineering do not realistically capture the effects of aquifer depletion on loss of profits from agricultural production. While the former literature ignores the physical characteristics of aquifer and the relationship between aquifer levels and groundwater availability, the latter strand of literature does not consider farmers' decisionmaking as a result of aquifer depletion. Misspecification of these relationships and their effect on irrigation decisions can result in misunderstanding the consequences of aquifer depletion and may provide ineffective policies. This paper provides a framework to study the effects of aquifer depletion on the profit of agricultural production. We apply the framework to the case study of the northern portion of the High Plains Aquifer which includes parts of Nebraska and Kansas to estimate the loss of profits between 1980 and 2009 as a result of aquifer depletion.
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