The Unintended Consequences of Subsidized Irrigation Conservation

In recent years, water management experts in drought-ridden states have faced a perplexing problem: technologies meant to conserve water often lead to an increase in water consumption. This rebound effect—a phenomenon well documented in energy efficiency projects—is an unintended consequence of government-subsidized, cost share programs that enable farmers to convert to more efficient irrigation systems. The programs may be producing cost savings that increase consumption behavior, however. Two case studies, from the Midwest High Plains Aquifer and the Upper Rio Grande Basin, describe the behavioral changes of farmers who adopt these conservation technologies.

A 2014 study tracks the outcomes of a cost share program in western Kansas from 1996 to 2005. The project was 75 percent financed by the state and enabled farmers in the High Plains Aquifer to switch from conventional center-pivot irrigation systems to dropped-nozzle systems. The latter design was championed by local government as an ideal fit for the hot and windy climate of the region. Additional cost savings were expected to accrue from the fact that dropped systems require less pump pressure to operate.

C.-Y. Cynthia Lin and Lisa Pfeiffer collected panel data from the Kansas Water Office’s Information Management and Analysis System regarding two dependent variables: applied water per acre and total acres irrigated. The panel approach was instrumental in allowing them to difference out individual farmer preferences for over irrigating, as well as under irrigating. Cost share data was collected from the Kansas State Conservation Commission regarding production and revenue data from seven standard crop groups: alfalfa, soybeans, corn, wheat, sorghum, corn/wheat mix, and soy/corn mix.

Overall, the conversion to more efficient irrigation was actually shown to increase total groundwater extraction by three percent. The authors conclude that farmers used the efficiency savings to either apply more water per acre or to leave fewer fields fallow. Efficiency savings came from the reduced marginal cost of groundwater extraction from the lower pump pressure of operations, as well as the ability to more closely match the water delivery process to a crop’s water requirements. Since state governments, however, do not subsidize the marginal cost of water, these subsidies, administered in the hopes of alleviating water scarcity, do not have a direct effect on water usage or crop decision behaviors. Though yield information was somewhat limited, the tendency of farmers to plant more crops in once fallow fields was discovered; farmers were more likely to plant water-intensive alfalfa, corn, and soybeans in a higher proportion of their fields.

A second case study in the International Journal of Water Resources Development looks at the financial outcomes of offering subsidies to Upper Rio Grande basin farmers to switch from surface to drip irrigation systems. The primary advantage thought to occur with drip irrigation is reduced operational costs. It is possible that the conversion would not reduce water use, but, due to the direct application of water at the root zone, farmers are usually able to avoid excessive irrigation—and may benefit from higher yields.

Conversion without subsidized help, however, is a sizable investment. After gathering detailed drip irrigation budgets from local farmers, it was calculated that conversion per acre for a 10-year drip irrigation system would cost at least 3,640 dollars.

Interview responses reveal that local farmers, even after the conversion, interpreted their water rights as “the right to apply no more than the base amount of water on their land,” rather than “the right to deplete no more than the base amount of water.” As a result, the authors note that, without vigilant water rights administration and continued subsidies, farmers will simply bring more land into production, trying to exercise their right to apply what is left of their base water allocation.

Although this rebound effect is not explicitly quantified, as in the work of Lin and Pfeiffer, water rights administrators in similarly constrained basins should note the negated conservation that accompanies cost share or subsidized programs. Without a clear definition of water rights—the right to apply a baseline amount versus the right to deplete an aquifer amount—farmers are apt to reinvest water and cost savings to increase their yields or switch to “thirstier” crops. Such findings could pave the way for currently unpopular ideas like water taxes or extraction quotas, especially in places like California, where long-term droughts have become commonplace.

Article Sources:

Does Efficient Irrigation Technology Lead to Reduced Groundwater Extraction? Empirical Evidence. Lisa Pfeiffer and C.-Y. Cynthia Lin, Journal of Environmental Economics and Management, 2014.

Economics of Agricultural Water Conservation. Dagnino and Ward, International Journal of Water Resources Development, 2012.

Feature Photo: cc/(UD extension)