IRRIGATION, ADAPTATION, AND WATER SCARCITY
Economics is about the management of scare resources. In agricultural production, water stress and excess heat are the main constraints. The three essays of this dissertation try to improve our understandings of how climate and water resources interact with agricultural markets, and how global changes in agricultural markets may affect water resources. I construct empirical and simulation models to explain the interplay between agriculture and water. These models integrate economic theories with environmental sciences to analyze the hydroclimatic and economic information at different geospatial scales in a changing climate.
In the first essay, I illustrate how irrigation, as a potential adaptation channel, can reduce the volatility of crop yields and year-on-year variations caused by the projected heat stress. This work includes estimation of yield response to climate variation for irrigated and rainfed crops; and global projections of change in the mean and the variation of crop yields. I use my estimated response function to project future yield variations using NASA NEX-GDDP climate data. I show that the impact of heat stress on rainfed corn is around twice as big as irrigated practices.
In the second essay, I establish a framework for estimating the value of soil moisture for rainfed production. This framework is an extension of Schlenker and Roberts (2009) model enabled by the detailed soil moisture information available from the Water Balance Model (WBM). An important contribution is the introduction of a cumulative yield production function considering the daily interaction of heat and soil moisture. I use this framework to investigate the impacts of soil moisture on corn yields in the United States. However, this framework can be used for the valuation of other ecosystem services at daily basis.
In the third essay, I have constructed a model that explains how the global market economy interacts with local land and water resources. This helps us to broaden the scope of global to local analysis of systems sustainability. I have employed SIMPLE-G-W (a Simplified International Model of agricultural Prices, Land use, and the Environment- Gridded Water version) to explain the reallocation across regions. The model is based on a cost minimization behavior for irrigation technology choice for around 75,000 grid cells in the United States constrained by water rights, water availability, and quasi-irreversibility of groundwater supply. This model is used to examine the vulnerability of US land and water resources from global changes.