NHI has originated and directed work to field-test and document the results of a variety of economic incentives to improve agricultural water use efficiency. This work was performed in collaboration with several agricultural water districts that receive irrigation water from the U.S. Bureau of Reclamation’s Central Valley Project and agricultural economists and water engineers from the University of California Berkeley, Davis and Riverside campuses.
At the Arvin Edison Water Storage District located in California’s Central Valley, NHI and partners tested tiered pricing of surface water and volumetric pricing of groundwater. We investigated the technical feasibility of groundwater banking in the area. We also tested an electronic water market.
The results of this work comprise the richest data set yet compiled on how farmers’ water use decisions respond to changes in water price and to market opportunities for conserved water. Our findings strongly suggest that economic incentives are more efficient than regulation in inducing larger investments in water-conserving technologies and techniques in Western agriculture.
Our work reveals that farmers make water conservation decisions depending on factors such as magnitude and expected duration of water scarcity, environmental conditions, farmer characteristics, crops grown, and availability and quality of groundwater. Conservation responses include fallowing, adoption of conservation technology, crop shifting, and groundwater pumping.
To better understand the factors that prompt farmers to use precision technologies, NHI and partners conducted a detailed study of irrigation technology adoption in Arvin-Edison. We concluded that water price does have a significant impact on technology adoption. However, other factors appear to influence technology choice more. For instance, landscape characteristics (slope, soil permeability) and microclimate (number of frost-free days) appear to have more influence. Thus, we should not expect a uniform response to changes in water price. Rather, responses will vary by location.
The same group of collaborators found in a review of California growers’ response to the 1987-1992 drought that farmers dealt with scarcity by reducing demand (fallowing and adoption of conservation technology, especially drip and microsprinkler) and by procuring supplemental water (primarily groundwater). Water trading also increased in volume and in importance.
