Results carry lessons for other agricultural regions, both coastal and inland. Irrigation of arid and semi-arid lands leads to continuously increasing salt levels in the water and soil over time, even in the absence of seawater intrusion. In fact, 20% to 50% of irrigated agriculture worldwide is already negatively impacted by salinity . In coastal regions, this effect is compounded by seawater intrusion, which is currently estimated to impact 9% of the U.S. coastline . To date, saltwater intrusion into California’s aquifers has been primarily attributed to the over-exploitation of groundwater . However, with predictions for sea levels to rise by two to fifteen feet by 2100, this issue will pose an even greater challenge to coastal agriculture in California and beyond . Our papers contributes to a scant empirical literature estimating the effect of changing irrigation water quality. While seawater intrusion is known to be a major issue for coastal agriculture, little research has been done to empirically estimate the economic damages from it .Related empirical studies have estimated the value of groundwater quality to irrigated agriculture in inland regions using hedonics and demonstrated the importance of accounting for unobserved heterogeneity in crop choice models . Our setting allows us to arrive at a revealed preference measure of the willingness-to-pay for changes in groundwater salinity that accounts for unobserved heterogeneity, providing a key parameter for corrective policies related to groundwater overdraft and saltwater intrusion.Simulating crop choice and economic damages under changing salinity conditions contributes to discussions about climate change and its impact on agriculture. Globally,25 liter pot there are already many documented cases of seawater intrusion affecting coastal agriculture, such as in Korea, Malaysia, Oman, Vietnam, and Cyprus .
Sea-level rise is conjectured to increase through the end of the century and beyond, and conditions may be exacerbated due to the presence of more severe and prolonged droughts . To date, much of the literature on the economic impacts of climate change to agriculture has focused on the role of temperature and precipitation. Parallel studies look at yield losses in response to temperatures, and include crop switching . A growing economic literature considers the loss to property values of sea-level rise and other implications for coastal residential areas . Much less is known about the economic impacts of sea-level rise to agriculture. Finally, this analysis has important policy implications for groundwater in agricultural regions globally. Optimal groundwater regulation depends on the magnitude of the economic damages of over pumping. Many groundwater basins around the world have already been stressed by persistent over-pumping of groundwater . In California, groundwater issues are at the forefront of water policy debates, where groundwater accounts for 40% of the state’s agricultural water supply on average. California’s Sustainable Groundwater Management Act of 2014 requires over drafted basins throughout California to reach and maintain long-term stable groundwater levels and correct undesirable outcomes associated with pumping over the next 20 years. The legislation includes specific mandates to local groundwater agencies to address seawater intrusion. Quantifying the magnitude of the costs associated with changing water quality is critical to informing optimal groundwater regulation. The Pajaro Valley is adjacent to Monterey Bay on California’s central coast.
It provides an ideal empirical setting in which to study the effects of changing groundwater quality on farmer welfare for several reasons. First, this productive, groundwater-dependent agricultural region has suffered from saltwater intrusion of the underlying aquifer for decades. Groundwater serves as the predominant source of irrigation water – over 95% of total supply – in the region. Additionally, the agency managing the basin has run an extensive monitoring campaign that has generated unique panel data with which we use to evaluate the damages associated with changing groundwater salinity. Importantly, the region is likely representative of other coastal agricultural regions that will suffer from groundwater contamination due to sea-level rise and over pumping in the coming decades.Farmers in the Pajaro Valley are almost entirely dependent on groundwater to irrigate and grow their crops. These groundwater withdrawals, combined with the proximity to the coast, have resulted in seawater intrusion of the underlying aquifer. Seawater intrusion has been documented in the Pajaro Valley since 1951, shortly after irrigation tube wells were introduced in the region. The seawater intrusion of the underlying aquifer is primarily driven by groundwater pumping, which is nearly twice the sustainable yield of the basin annually. This means that in any given year only half of the extracted groundwater is replenished, through rainfall or from water percolating through the soil after being applied to fields. Seawater intrusion occurs when saline water from the ocean enters a freshwater aquifer. Traditionally, seawater sits below freshwater along the coast, given its higher density from the salt. However, lowered water levels from pumping groundwater faster than the rate of recharge can move seawater to freshwater zones. Depending on location, this can happen laterally, upward , or downward . The extent of the intrusion in the Valley has increased seven-fold since the 1950s .
Seawater intrusion in the region, on average, moves inland approximately 200 ft/year, and renders 11,000 acre-feet of water unusable annually . In 1980, the Pajaro Valley was one of 11 water basins listed as threatened by severe overdraft by the California Department of Water Resources . This led to the development of the Pajaro Valley Water Management Agency in 1984, which serves a variety of stakeholders, including farmers and the city of Watsonville. The agency has the authority to conduct an array of basin management activities, including conservation programs, monitoring, recycled water production, and to assess fees to fund these programs. Importantly, the water district established a network of 266 monitoring wells throughout their service area that measure groundwater levels and various water quality parameters. Figure 2.1 shows PV Water’s service area and the locations of all the wells monitored by agency. Through this extensive network of monitoring wells, PV Water has tracked groundwater salinity over time and across space,raspberry cultivation pot providing rich variation and a unique opportunity to empirically estimate the fraction of farmers that switch crops given a change in groundwater quality. PV Water has undertaken significant efforts to reduce saltwater intrusion and salinity in the basin. Their primary strategies have been to provide coastal groundwater pumpers an alternative water source for irrigation and to artificially recharge the aquifer. These programs have been executed in coordination with the city of Watsonville through the development of a recycled water facility that treats wastewater from the city, a recharge facility, and a distribution system that pipes recycled water to coastal farms. As a means to allocate limited recycled water supplies, the agency created a “Delivered Water Zone” outlined in Figure 3.7. Only users within this zone can access recycled water. To generate revenue to support these programs, the agency collects fees for delivered water and fees for groundwater pumping in the basin. Our empirical strategy accounts for these important factors which may be correlated with both groundwater salinity and crop choice. Few other mitigation strategies remain for reducing groundwater salinity. Importing or purchasing surface water from other regions of the state is prohibitively expensive since the Pajaro Valley is not connected to the state or federal water delivery infrastructure. Desalination is also a very high-cost alternative . And since the mission of the local water management agency is to preserve agriculture in the region, policies to reduce groundwater extraction are unattractive.Known for its berry production, the roughly 30,000 irrigated acres in the Valley produce a range of high-valued fruits and vegetables, including lettuces, artichokes, broccoli, strawberries, blackberries, raspberries, and apples. In 2019, the crop value from the Pajaro Valley was approximately $1 billion.
Many of these crops are grown predominately in coastal regions because they thrive in the foggy coastal micro climates. At least 20 different crops fall into the category of “vegetable row crops” grown in this region. The profusion of viable crop choices in the Pajaro Valley is an order of magnitude different from other agricultural regions of the county like the mid-western U.S. However, the diversity of crops here is not unlike other regions of the state or other parts of the California coast. Groundwater salinity and seawater intrusion is a concern for agriculture because it can impact productivity. Crop yields decline as water salinity increases, which decreases welfare for farmers. Figure 3.4 shows the estimated percent of maximum yield achievable at various levels of irrigation water salinity for the four major crop categories in our study region .Different crops have varying salinity tolerances. If, under increasingly saline conditions, a farmer continues growing the same crop, then the crop will face some yield loss due to declining quality, all else equal, resulting in reduced revenues. This profit decline can be mitigated by switching to a less salt-sensitive crop.Figure 2.3 illustrates this trade off with a stylistic representation of two crop yield relationships expressed as a function of total dissolved solids. There exists a point at which it is more profitable to switch crops in the face of increasing water salinity. A look at the approximate revenues generated by these crops helps to demonstrate the significance of these yield declines. A typical parcel growing organic strawberries in this region yields roughly 4,250 trays/acre, which at $13.50/tray would generate $57,375 in revenues per acre. Romaine lettuce fields can produce roughly 750 cartons/acre and at $15/carton would lead to per acre revenues of $11,250.6 Dropping from 100% to 90% yield capacity would equate to revenue losses of approximately $5,738 and $1,125 per acre for strawberries and romaine lettuce, respectively. Given large potential revenue losses from declines in yield capacity combined with the absence of alternative mitigation strategies, crop switching due to changes in groundwater salinity is likely and the potential damages could be significant. The primary data for this analysis consist of seasonal well-level groundwater salinity measurements and annual, spatial land use data compiled by the water district. These data are supplemented by additional district data on groundwater depth, water prices, and quantities of recycled water delivered to a small subset of farmers. In addition, we collected publicly available data on property boundaries, crop prices, and weather. Table 3.2 provides descriptive statistics. Data on water quality spanning 1957 to 2020 have been collected and provided to us by PV Water. While PV Water reports salinity with a variety of metrics, including electrical conductivity, chloride, and total dissolved solids , we focus on TDS.7 TDS is the most common salinity measure used and discussed in scientific articles and outreach publications intended for growers. Second, as opposed to chloride, which strictly measures the salinity from seawater, TDS reflects a broader measure of salt content and is likely more reflective of how growers make decisions. For each quarter, we take all water quality measurements of TDS and use an inverse distance weighting technique to interpolate a map of water quality for the entire Pajaro Valley. On average, there are 68.3 quality measurements in each quarter of our sample period .Figure 3.6 shows the history of seasonal average TDS values spanning 2009-2020, highlighting strong seasonal salinity patterns in the basin. Throughout the sample period, seasonal TDS levels have averaged 763 mg/L and ranged from a low of 272 mg/L to a high of 17,104 mg/L. Groundwater pumping, drought, and rainfall are known to be the primary drivers of the inter- and intra-annual variation in groundwater salinity that we observe in our setting. In general, salinity reaches its peak at the end of the growing season, which is when groundwater draw down is at its highest, and before the rainy season begins to recharge the aquifer. In what follows, we focus on TDS observed in the spring season, March through May, since this is the period just before the primary summer growing season. Figure 2.5 provides a sense of the spread in spring salinity observations in and across years, showing that the bulk of observations in this quarter range from 400-600 mg/L and vary from year to year. Soil characteristics, land elevation, and proximity to the coast are the primary reasons for spatial differences in groundwater salinity across the basin. Figure 3.7 demonstrates this cross-sectional variation by mapping the average TDS of each parcel from 2009-2017.