Conference Agenda

Climate change is increasing the variability of water availability, while the rising social, ecological, and economic costs of traditional supply-side management have shifted the policy focus toward demand-side mechanisms, such as seasonal forecasts and water markets. The Murray-Darling Basin (MDB), where the world most devel- oped water market is located, is characterized by extreme hydro-climatic variability that necessitates complex strategies to support irrigated agriculture.

While recent work by Rafey (2023) has demonstrated that water market realloca- tion generates substantial welfare gains in the MDB during droughts by optimizing water use after land-use decisions are made, this study overlooks adjustments at the earlier, extensive margin. A critical challenge remains in understanding how the timing of water allocation announcements drives irreversible planting decisions for water-intensive summer crops like rice and cotton, which must be sown before total seasonal water availability is fully known.

To address this, we analyze agricultural land-use decisions across six regions in the southern and northern Murray–Darling Basin (MDB) from 2006 to 2020, using a panel regression framework to estimate the causal effect of pre-planting water allocation announcements on aggregate crop acreage, while controlling for rainfall and seasonal climate outlooks.

We find that farmers significantly adapt acreage in response to early allocation signals. Specifically, in the NSW Murray and Murrumbidgee regions, the reduction in water demand driven by acreage contraction compensated for between 6.03% and 12.98% of the total yearly water reduction in the southern MDB during periods of scarcity. This response is comparable in magnitude to the gains from post-land-use decision reallocation found by Rafey (2023). These findings imply that in the MDB water market ex-ante acreage adaptation provides a resilience mechanism compa- rable to ex-post water trading, highlighting the critical value of early allocation information for managing water scarcity

Social scientists increasingly use comparisons between long-difference and panel fixed effects estimators to measure climate adaptation. Despite their empirical relevance, there is no formal framework to assess to what extent these comparisons are valid. We demonstrate two limitations with this empirical strategy for quantifying climate adaptation. First, standard implementations of these estimators yield biased estimates of both long-run and short-run population parameters. Second, the direction of this bias may substantially underestimate adaptation. We illustrate these limitations by examining the finite-sample performance of both estimators in an empirically-calibrated simulation design and provide best-practice recommendations on how to implement the long-differencing approach.

Voluntary incentive-based policies have been gaining traction as a way to protect land and water. However, the evidence of their effectiveness to date remains sparse, especially when it comes to water pollution. Water pollution has been an increasing concern globally, with agricultural runoff being a primary culprit. Because command-and-control legislation has not always been effective, voluntary incentive-based water certification schemes have been propounded as a way to improve agricultural practices on farms. Even though some of these have been existence for over 10 years, rigorous evidence of their effectiveness is still largely lacking. We address this gap by analyzing the impact of Minesota's Water Quality Certification Program on small-scale farmer practices. Drawing on a survey of over 600 farmers, we find that the program increased the adoption of water-protecting farming practices, specifically related to changes in land use (e.g., cover crops and conservation cover). However, the magnitude of the impact is small. We do not find a robust significant effect on the adoption of nutrient management practices. Our work has important implications for the design of the program, implementation, and the future evaluations of the program.

This study extends the Ricardian framework to forestry by accounting for tree growth and harvest dynamics. Whereas standard Ricardian applications in agriculture assume that farmland prices reflect a perpetual flow of annual profits from the most climate adapted crops, forestland prices additionally capitalize the age dependent value of standing timber accumulated over decades. Coupling the Ricardian and Faustmann approaches, we theoretically show that this age dependence is systematically tied to species and therefore to climate, so that stand age becomes a confounding factor in standard pooled Ricardian regressions. Our theory implies a correction, the age structured Ricardian approach, that regresses the climate value relationship across stand age classes, with the coefficients obtained for the youngest class providing the closest approximation to the true Ricardian effects in the context of forestry. Using geolocated plot level data from all forestland transactions in France between 2014 and 2023, covering over 100,000 plots, matched to forest age at sale from 1 to 219 years, we empirically confirm that standard pooled Ricardian estimates are biased, typically understating the benefits of warmer climates to forestry, in our case by nearly a factor of two. Consistent with our theory, age structured coefficients exhibit an inverted U shape with stand age. Capitalization of climate productivity effects into forestland prices first strengthens as stands mature and then weakens as slow growing species increasingly dominate older age classes. Our findings hold under multiple sensitivity analyses and extensions, making clear that ignoring age related dynamics systematically biases climate estimates in Ricardian applications to forestry.

Agricultural and other nonpoint sources have typically been exempted from the permitting requirements of the National Pollutant Discharge Elimination System (NPDES), including the system monitoring and enforcement requirements. However, EPA recently updated the program to require permits for animal feeding operations (AFO) that potentially contribute to surface waterbody impairments. This study contributes to the literatures on (1) the effectiveness of monitoring and enforcement, i.e., regulatory interventions, and (2) the water quality impacts of AFOs, by examining the efficacy of NPDES inspections and enforcement actions administered against permitted AFOs in the US. Unlike standard point sources, permitted AFOs do not face numeric discharge limits and contribute to surface waterbody pollution through nonpoint source runoff rather than direct discharges. Given this pollution pathway, we examine the efficacy of regulatory interventions at improving the environmental (manure) management of AFOs by analyzing the interventions’ impacts on surface water quality. Despite the importance of AFOs, no previous study of regulatory interventions examines this type of discharge source. Our analysis leverages within-AFO variation in experiences with regulatory interventions and the upstream and downstream nature of the US water network to identify the effects of interventions on total phosphorus and total nitrogen concentrations. We find that the more “severe” actions – federal inspections and monetary penalties – (compared to state inspections and informal enforcement) reduce downstream concentrations of total phosphorus and total nitrogen by between 1 % and 3 %. We provide a benefit-cost analysis that suggests regulatory interventions at AFOs produce water quality benefits that largely exceed the associated costs.

Access to agricultural information is crucial in driving the adoption of sustainable agricultural practices (SAPs). This paper investigates smallholder farmers’ simultaneous information access to shape decision-making on water conservation practices (WCPs) in the Limpopo River Basin of South Africa. Using six agricultural information sources (AISs)—agricultural extension officers (AEOs), farmer-to-farmer, mobile phones, social media, television (TV), and radio—we estimate a multivariate probit model to understand their interconnectedness (substitutes or complements) in shaping farmers’ decision-making on adopting WCPs. However, for the intensity of their use, an ordered probit model is estimated. The results show significant bundling of farmer-to-farmer and AEOs, mobile phones and AEOs, radio and AEOs, mobile phones and TVs, mobile phones and social media, radio and social media, and radio and mobile phone sources. Our results further show that gender, age, education, and farm size, among other factors, induce the probability and extent of use of AISs. Accordingly, we advocate that to enhance farmers’ ability to make informed decisions on WCPs, integrated information delivery and support systems should be developed to combine multiple AISs. This would enhance farmers' decision processes.

Climate change threatens agricultural land use, but the capacity of market prices to buffer these impacts remains fundamentally unknown. While higher prices can incentivize farmers to maintain cultivation, this adaptation may be inefficient if it occurs in different locations than where climate stress is most severe. Here, we develop an integrated econometric framework that leverages three satellite land-cover products (CDL, MODIS, Annual NLCD) to quantify the causal effects of climate and price on US cropland change from 2008-2020. Our methodological approach, which accounts for classification uncertainty, reveals that price-induced expansion occurs primarily on marginal lands at the extensive margin of cultivation. We find a significant spatial misalignment: price incentives drive expansion in regions like the Great Plains, while climate-induced losses are concentrated in core agricultural zones like the Southeast. Projecting forward, we identify a large Adaptation Gap, with the price premiums required to offset climate damages (17.9-47.3%) far exceeding projected market price increases under moderate to severe warming scenarios. Our results suggest that relying on market forces alone is an inefficient and potentially perverse strategy for ensuring agricultural resilience, highlighting the need for spatially targeted adaptation policies.