The Economic Benefits of Irrigation Districts under Prior Appropriation Doctrine: An Econometric Analysis of Agricultural Land‐Allocation Decisions

Abstract

The economic literature has established that prior appropriation doctrine induces heterogeneity in risk among water users, which leads to an inefficient allocation of resources. In this study, we show that irrigation districts alleviate that risk by deviating from the strict application of prior appropriation doctrine. As a result, farmers inside irrigation districts are able to plant more water‐intensive crops than farmers outside irrigation districts, which increases average profitability. We empirically examine this hypothesis by leveraging a georeferenced panel data set at the spatial scale of the individual water right and spanning 2007–14 in Idaho's Eastern Snake River Plain. Our results indicate that on average, irrigation districts allocate larger portions of their land to drought‐sensitive, high‐value crops such as sugar beets and potatoes. As a result of differences in planting decisions, members of irrigation districts earn on average $16.20 per acre, or 6.0% more per year than those outside of irrigation districts.

Trend Detection for the Extent of Irrigated Agriculture in Idaho’s Snake River Plain, 1984–2016

“…The results and the datasets developed by this study could be used to assess and predict the impacts of climate change on land-use decision-making [40]. More detailed econometric modeling of irrigator behavior within the study region, which accounts for omitted factors such as temperature, agricultural market forces, and productivity, may be possible based on the results of this study.…”

“…These restrictions take the form of property rights, referred to as water rights, which define the availability of irrigation water for individual farms. Water rights therefore influence crop yields, land-use decisions, and agricultural land values [38][39][40].…”

“…In many instances, the polygons defining the place of use for each water right overlap with one another. Overlap indicates that a farmer owns a water right portfolio that permits irrigation of the same parcel of land with rights that have different attributes [40]. To distinguish lands eligible to be irrigated under multiple water rights, we created a new layer describing distinct place of use polygons that are defined by the intersection of places of use.…”

Trends in U.S. Irrigated Agriculture: Increasing Resilience Under Water Supply Scarcity

“…Irrigation districts are commonly semi-public entities that operate under the auspices of State law and usually receive water from the U.S. Bureau of Reclamation or State water projects. In many cases, the water delivery institutions (developed under prior appropriation) facilitate markets for water rights, potentially increasing the efficiency of water allocations and the profitability of irrigated agriculture (Ji and Cobourn, 2018). 25 The doctrine of prior appropriation, predominant in the Western United States, assigns water rights based on the beneficial use of water rather than the ownership of riparian land (Haar and Gordon, 1958;Huffaker, Whittlesey et al, 2000).…”

The effect of prior appropriation water rights on land‐allocation decisions in irrigated agriculture

“…We exclude from this analysis surface water rights owned in common by a group of irrigators (as in irrigation districts). Water rights owned in common by groups are administered under a correlative rights system, which offers multiple mechanisms to reduce and spread the risk of a water shortage among members (Ji & Cobourn, 2018). We also exclude groundwater rights.…”