Essays on the Economics of Groundwater Salinity

Coastal agricultural regions are often faced with a series of complex economic and environmental problems. Although coastal microclimates make the production of delicate produce highly desirable, many are at risk of sea-level rise, coastal flooding, and groundwater overdraft. These phenomena lead to seawater intrusion, which contaminates groundwater and reduces agricultural productivity. In this work, I examine the damages from seawater intrusion, as well as a municipal treated wastewater program designed to mitigate its effects./nIn the first chapter, I introduce the Pajaro Valley, the setting for the economic analysis of seawater intrusion and municipal recycled wastewater in chapters two and three. The Pajaro Valley provides an excellent study region because of its long-term seawater intrusion issues, the water management agency's high quality monitoring efforts, and the wide variety of specialty crops produced. Within this introduction, I explain the mechanics behind seawater intrusion and its impacts to crop production. I detail the history of intrusion within the Pajaro Valley, as well as the local groundwater management structure and their efforts in staving off further damage. I also introduce the municipal treated wastewater program, other alternate water sources, and the pricing structure for water in the valley. In total, this provides important historical context for the remaining analysis./nIn the second chapter, co-authored with Ellen Bruno and W. Michael Hanemann, I examine agricultural producers' willingness-to-pay to avoid saline groundwater. This chapter combines panel measurements of groundwater salinity and high resolution land use data from California’s central coast to predict the likelihood that farmers shift crops in response to a change in groundwater salinity. We use observed choices to estimate the impact of salinity on crop choice with a panel mixed logit model, controlling for regional trends and relevant field-level characteristics. Then, we derive measures of the marginal willingness to pay and simulate crop changes under salinity conditions likely to occur with climate change. Our model indicates that growers are willing to pay between $1,612 and $16,369 per acre for a 10 mg/L reduction in total dissolved solids depending on the crop. Results inform our understanding of the cost of sea-level rise to agriculture./nIn the third chapter, I examine the effect of a proposed seawater intrusion mitigation strategy: the development of a municipal treated wastewater program. This paper is the first to empirically evaluate the benefits of recycled water in agriculture. I measure the direct effects of recycled water deliveries, evaluating crop choices and welfare gains for growers receiving water, using a panel mixed logit model. I then measure the indirect impacts, using event studies to measure how recycled water changes the salinity of the underlying water basin. I evaluate the effects for growers that receive recycled water, as well as those who do not have access to recycled water, but farm in the same region. In a high-value agricultural region, I find that growers receiving recycled water shift towards salt-sensitive, profitable crops, with welfare gains of $16 million dollars annually for 5500 acre-ft in delivered water. Salinity of the underlying aquifer, measured using total dissolved solids, improves near parcels receiving delivered water by up to 570 mg/L, and these changes occur in years where aquifer salinity levels are highest. Overall findings suggest that for delicate, profitable produce, recycled water is a promising strategy in mitigating damages from seawater intrusion and groundwater overdraft.

Advisor: Villas-Boas, Sofia
Hanemann, William M