[1] Using panel data from a period of water rate reform, this paper estimates the price elasticity of irrigation water demand. Price elasticity is decomposed into the direct effect of water management and the indirect effect of water price on choice of output and irrigation technology. The model is estimated using an instrumental variables strategy to account for the endogeneity of technology and output choices in the water demand equation. Estimation results indicate that the price elasticity of agricultural water demand is À0.79, which is greater than that found in previous studies.

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The paper estimates the impacts of risk‐reducing government programs on the use of conservation tillage (no‐till and other conservation tillage) practices in agriculture. Conservation tillage can be used to reduce production risk from weather shocks. However, subsidized crop insurance and disaster payments also reduce risk through financial assistance. The paper examines the extent to which risk‐reducing tillage practices and government programs are substitutes for each other. The economic model shows that a decline in average weather conditions increases the use of conservation tillage. The economic model also shows that the impact of weather risk and risk aversion on risk‐reducing practices like conservation tillage are ambiguous. The effect depends on the degree that losses are offset by government payments. The paper uses county‐level tillage practice data from the Conservation Tillage Information Center for the three‐state region of Iowa, Nebraska, and South Dakota. Results are estimated using instrumental variables and spatial panel data techniques. Instruments for the program participation and payment data include political variables and weather data. The empirical analysis shows that recent disaster and indemnity payments are associated with an increase in the use of no‐till and a decrease in the use of other conservation till. Results also show that producers in counties with recent drought and flood events are more likely to use other conservation tillage. The results imply that there may be unintended impacts of changes to agricultural policies like disaster payments and crop insurance on the use of on‐farm conservation practices.

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This paper will argue that increased demand for water resources and higher cost of development of new water resources require a transition toward water systems that enhance conservation by adoption of efficient irrigation and application technologies, improving water delivery systems, and improving the efficiency of water allocation. This can be done by a transition from systems of water queuing based on historical water rights to systems of trading and efficient pricing. The design of water pricing has to consider political-economy and equity considerations and therefore we present alternative approaches -including active and passive trading with water markets, and various institutions including tiered pricing. Incentives to adopt cleaner and "greener" technology is essential for the improvement of water quality and we will present a framework for pricing water and inputs that affect water quality taking into account heterogeneity among water users and across locations. The analysis will use illustrations from various case studies including the California water market.

The paper develops a comparative statics model of long‐run industry equilibrium in the presence of size‐based environmental regulation stringency and applies the model to the U.S. hog industry. The economic model shows that when size‐based environmental stringency is also size biased, large farms downsize, expand, or do neither depending on how environmental stringency shifts their marginal production cost relative to their average cost. Empirical testing using data from the top‐ten hog‐producing states suggests that environmental regulation stringency has limited impact on small farms and leads to a reduction in the number of large farms. Results cannot reject positive size bias at the farm level due to the stringency of environmental regulation.

The paper examines whether a firm is more or less likely to adopt conservation technology when input prices are stochastic. The results are critical to determining whether programs and contracts that reduce input price uncertainty may deter the adoption of conservation practices. An economic model of the technology adoption decision shows that the net effect of input price risk is ambiguous and depends on several factors: the mean price effect, the shutdown effect, and the risk aversion effect. Results are estimated using water price and irrigation technology adoption data. The results show that a stable input price increases the adoption of conservation technology, but the impact depends on crop choice and land quality characteristics.

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