Factors affecting groundwater depletion in the Ogallala Aquifer: An application to the Texas High Plains

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The Ogallala Aquifer is one of the largest aquifers in the world underlying parts of eight states in the United States. This aquifer is considered to be a non-renewable resource because of the low rate of natural recharge compared to the amount of groundwater extracted every year. Due to the large scale of production of agricultural commodities, irrigated agriculture on the Southern High Plains of Texas (Texas High Plains) relies heavily on groundwater extracted from the Ogallala Aquifer. Concerns about the high rate of depletion of the aquifer in this region in recent years have led to the enactment of policies designed to slow down water extraction and increase the usable life of this resource. However, policy implementation has not been uniform across the aquifer, leaving some farmers in portions of the aquifer with no effective groundwater extraction guidelines only a short distance away from areas where farmers face regulatory limits. This dissertation addresses two sets of issues related to groundwater utilization in the Texas High Plains through two different but related studies. The first study investigates the effects of policy implementation uncertainty on the extraction of groundwater. In this first study, a seemingly unrelated regression (SUR) model is estimated for harvested acreage of the three major crops produced in six representative counties of the Texas High Plains. Corn acreage (an irrigation-intensive crop) is used as a proxy for groundwater use. In five of the six counties evaluated, corn acreage would be expected to increase (along with total groundwater use) upon the enactment of an unenforced groundwater extraction policy. After controlling for price and climate effects, it was concluded that there is strong evidence that groundwater use policy uncertainty is likely to increase groundwater extraction in the Texas High Plains region. The social desire to achieve perpetual sustainability of groundwater resources in the study region, or at the very least to prolong the life of the Ogallala Aquifer, has resulted in discussions about alternative groundwater management policies. Producers, in their concern about the implementation of policies to slow down groundwater extraction, may tend to use as much water as they can in the short-run to maximize profits before groundwater use restriction policies are enforced. For this reason, the second study conducted in this dissertation addresses possible factors that could contribute to lengthen the usable life of the Ogallala Aquifer. Specifically, in the second study a county-wide Texas High Plains representative time-varying non-linear optimization model that considers farm-level decision making with respect to groundwater use is used to evaluate the tradeoffs between time value of money and future agricultural productivity enhancements. The results of the second study reveal that the sooner economic agents who possess the property rights to the groundwater resources in the Texas High Plains realize the likely benefits associated with higher agricultural productivity in the future, the sooner water conservation goals could be fulfilled.

Policy Uncertainty, Resource Extraction, Irrigation, Agricultural Productivity, Technological Progress, Time Value of Money, Groundwater Extraction