Essays on the spatial dynamic interaction of individual behavior, institutions, and the environment

Savage, Jeffrey A.

Permalink

https://hdl.handle.net/2142/29726 Copy

Description

Title

Essays on the spatial dynamic interaction of individual behavior, institutions, and the environment

Author(s)

Savage, Jeffrey A.

Issue Date

2012-02-06T20:13:09Z

Director of Research (if dissertation) or Advisor (if thesis)

Brozović, Nicholas

Doctoral Committee Chair(s)

Brozović, Nicholas

Committee Member(s)

• Ando, Amy W.
• Braden, John B.
• Peterson, Jeffrey M.

Department of Study

Agr & Consumer Economics

Discipline

Agr & Consumer Economics

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Keyword(s)

• Groundwater
• Irrigation
• Econometrics
• Coupled Physical-Economic Systems

Abstract

Regulation of agricultural groundwater use is increasing throughout the world in response to legal and environmental claims on instream flows. Understanding how farmers make groundwater-use decisions is important to modeling their response to new policies, as well as to aquifer depletion and climate change. This dissertation presents two studies that seek to understand the spatial dynamic interaction between economic agents and physical systems. The approaches presented in each chapter use field-level data on the Republican River Basin in Nebraska to account explicitly for spatial heterogeneity in the economic, hydrologic, and agronomic variables that affect farm decisions. The first chapter is a discrete-time hazard analysis of irrigation technology adoption that assesses the importance of physical heterogeneity on investment timing. Given nonlinearities and thresholds in the relationship between physical variables and crop yields, the adoption of irrigation innovations may depend on parcel-level physical heterogeneity. We find that the sign and magnitude of the estimated effects of soil quality on adoption are sensitive to specification. The second chapter assesses whether there is a spatial pumping externality and whether there is any behavioral response to this externality. A large number of theoretical studies have considered strategic behavior by irrigators and recent empirical studies find evidence for strategic overextraction occurring. However, previous studies have not considered well density and spacing as endogenous to pumping decisions. We incorporate a well response function from the hydrology literature into a groundwater demand model in which interactions among spatially distributed farmers arise from spatial pumping externalities. We find that once endogeneity of well density is accounted for, evidence for strategic behavior is weak. Overall, the dissertation provides a number of implications for policy design. On one hand, the results from the duration analysis suggest that parcel-level data are important in understanding the determinants of irrigation technology adoption. Conversely, results from the spatial econometric analysis are consistent with myopic pumping behavior by farmers. In the absence of strategic interactions, policy analysis is greatly simplified because each user can be modeled independently.

Graduation Semester

2011-12

Permalink

http://hdl.handle.net/2142/29726

Copyright and License Information

Copyright 2011 Jeffrey A. Savage

Owning Collections