IMPACT OF ENERGY-COST AND WATER-RESOURCE AVAILABILITY ON AGRICULTURE AND GROUNDWATER QUALITY IN CALIFORNIA

This paper discusses the simultaneous effects of water scarcity and energy price increases on farm-level decisions such as water-related technology substitution and cropping patterns, and on groundwater quantity and quality, and farm income. A dynamic model is used. The model maximizes long-run private profits by incorporating dynamic relationships of water level and quality in aquifer, with management and technology change. The model is applied on a regional scale to conditions in Kern County, California. This region has been hit by a six-year drought, and faces a proposed increase in electricity rates for agricultural-class customers. The simulation results suggest that over time, given the changes in water availability and energy prices, the proportion of groundwater in irrigation water will increase, cropping patterns will consist of higher shares of salt-tolerant crops, more energy and water saving pumping and irrigation equipment will replace existing technologies, agricultural net income will drop significantly, the level of groundwater in the aquifer will drop, and its quality will degrade. In extreme scenarios, agriculture may cease in locations depending heavily on groundwater.