Climate, Water, Water Markets, and Texas Agriculture: Three Essays

Water availability and favorable weather conditions can greatly improve crop yields. Absence of irrigation water or unfavorable weather conditions can cause damages to crops and farmer income. Focusing on two agriculturally productive regions in Texas, this dissertation explores agricultural output when irrigation water decreases either due to economic market forces or aquifer depletion. Further, this work considers future climate impacts and the effect of a warmer and drier climate on agricultural output, crop mix, farmer income and aquifer characteristics. In the first region, I assess the effect of water markets that have arisen in the Edwards Aquifer. Aquifer water is used by agricultural, municipal, and industrial users. Since 1997, users have traded water in an interregional market through sales and leases. A growing population and increasing economic activity have increased marginal use values causing large transfers of water out of irrigation. An analysis on the effects of this market on the regional economy is done using econometric, panel data model. The results show that increased water market transfers negatively affected the agricultural industry as captured through changes in agricultural payroll. In the second region, I address water issues in the Texas High Plains where water from the Ogallala aquifer is used to irrigate crops. Water levels in the Ogallala aquifer are declining as irrigation pumping rates have far exceeded recharge thereby lowering water levels, decreasing aquifer life, and increasing pumping costs. I build a mathematical program to forecast expected agricultural output, income, and aquifer characteristics in the Texas High Plains from present day until 2080 under existing conditions and expected climate change. The model results show that dryland cropland and rangeland cattle production will replace irrigated agriculture over most of the study area by 2050. Adaptation scenarios are included to show a range of possible responses to a changing climate. I then use regional input output modeling to examine the impact of expected future depletion and climate-induced changes to agricultural output and crop mix on the regional economy. Results show that future adjustments due to climate change will have a negative effect on the regional economy