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ARS Home » Plains Area » Bushland, Texas » Conservation and Production Research Laboratory » Soil and Water Management Research » Research » Publications at this Location » Publication #405025
Research Project: Dryland and Irrigated Crop Management Under Limited Water Availability and Drought

Location: Soil and Water Management Research

Title: Do crop price expectations matter? An analysis of groundwater pumping decisions in Western Kansas

Author
item SUKCHAROEN, KUNLAPATH - West Texas A & M University
item GOLDEN, BILL - West Texas A & M University
item VESTAL, MALLORY - West Texas A & M University
item GUERRERO, BRIDGET - West Texas A & M University

Submitted to: Agricultural Water Management
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 1/7/2020
Publication Date: 1/14/2020
Citation: Sukcharoen, K., Golden, B., Vestal, M., Guerrero, B. 2020. Do crop price expectations matter? An analysis of groundwater pumping decisions in Western Kansas. Agricultural Water Management. 231. Article 106021. https://doi.org/10.1016/j.agwat.2020.106021.
DOI: https://doi.org/10.1016/j.agwat.2020.106021

Interpretive Summary: The declining Ogallala Aquifer is the main water resource for irrigated agricultural production in much of Western Kansas. It is unknown if expected crop price increases will lead producers to apply more water to maximize yields. Working in a project funded by the USDA ARS Ogallala Aquifer Program, scientists from Kansas State and West Texas A&M Universities used field-level data on groundwater pumped for irrigation in Western Kansas to examine whether irrigated producers’ groundwater pumping decisions are consistent with the yield maximization framework. In general, the empirical results indicate that crop price expectations have no significant impact on the quantity of groundwater pumped per acre. This suggests that groundwater pumping decisions are not consistent with the yield maximization framework and that irrigated producers consider groundwater as a fixed input possibly due to limited availability of groundwater in the area.

Technical Abstract: The Ogallala Aquifer is the main water resource for irrigated agricultural production in much of Western Kansas. It is hypothesized that as crop price expectations increase, producers will apply more water to increase yields in order to maximize profit. Using field-level panel data on groundwater pumped for irrigation in Western Kansas, this paper examines whether irrigated producers’ groundwater pumping decisions are consistent with the profit maximization framework by empirically testing if crop price expectations have a positive impact on the quantity of groundwater pumped. In general, the empirical results indicate that crop price expectations have no statistically significant impact on the quantity of groundwater pumped per acre. This suggests that groundwater pumping decisions are not consistent with the profit maximization framework and that irrigated producers consider groundwater as a fixed input possibly due to limited availability of groundwater in the area. Our econometric analysis also suggests that only a small portion of rainfall is effective.