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In the United States, agriculture is responsible for the majority of consumptive water use. To reduce consumptive use in water scarce regions, policymakers have implemented a number of costly interventions. These interventions range from land retirement to subsidies that encourage the adoption of efficient irrigation technologies. In nonagricultural contexts, costly policy interventions have been complemented by low‐cost interventions inspired by behavioral economics. Whether these behavioral interventions are effective in the context of commercial farming is not well understood. In a preregistered, randomized field intervention, we estimate the impact of social (peer) comparisons on agricultural groundwater users in Colorado and Kansas. More than three thousand irrigators were randomized to receive either an annual peer comparison or no comparison. The peer comparison contrasted each irrigator's groundwater use to the distribution of use by neighboring irrigators. The comparison intervention reduced average annual groundwater use by 4.05% [95% CI (−5.87%, − 2.21%)], resulting in an aggregate reduction of more than 21,000 acre‐feet per year at a cost less than $1.31 per acre‐foot conserved. The estimated treatment effect was larger among irrigators with lower pre‐intervention water use. In the 3‐year experiment, we observed no evidence that the treatment effect substantially attenuated over time. We did, however, detect within‐irrigator spillovers in the treatment group: groundwater use also declined among wells that were not included in the peer comparisons (peer comparisons included a maximum of three wells). The results imply that social comparisons can be a cost‐effective tool, alongside other policy interventions, aimed at reducing agricultural water use. [ABSTRACT FROM AUTHOR]

In many regions of the world, energy costs associated with extraction represent the only explicit price for groundwater use. Therefore, energy pricing policies can significantly influence the use of scarce groundwater resources. This article leverages unique well‐level data on groundwater use, electricity prices, and pumping efficiency from the Republican River Basin of Colorado to estimate producer responses to changes in marginal energy prices. Empirical parameter estimates are used to simulate a change in energy pricing policy from existing decreasing block rate structures to a revenue‐neutral uniform marginal price. The simulation results reveal that, on average, uniform energy pricing leads to an 11% decrease in groundwater use than would occur under a decreasing block rate pricing regime. However, a transition to uniform energy pricing diminishes short‐run producer welfare. More broadly, the results illustrate how energy pricing has important implications for groundwater management and informs a more comprehensive understanding of how priced inputs influence the use of unpriced natural resources. [ABSTRACT FROM AUTHOR]

Abstract: Groundwater is a critical input to agricultural production across the globe. Current groundwater pumping rates frequently exceed recharge, often by a substantial amount, leading to groundwater depletion and potential declines in agricultural profits over time. As a result, many regions reliant on irrigated agriculture have proposed policies to manage groundwater use. Even when gains from aquifer management exist, there is little information about how policies affect individual producers sharing the resource. In this paper, we investigate the variability of groundwater management policy impacts across heterogeneous agricultural producers. To measure these impacts, we develop a hydroeconomic model that captures the important role of well capacity, productivity of water, and weather uncertainty. We use the model to simulate the impacts of groundwater management policies on producers in the High Plains aquifer of eastern Colorado and compare outcomes to a no‐policy baseline. The management policies considered include a pumping fee, a quantity restriction, and an irrigated acreage fee. We find that well capacity and soil type affect policy impacts but in ways that can qualitatively differ across policy type. Model results have important implications for the distributional impacts and political acceptability of groundwater management policies. [ABSTRACT FROM AUTHOR]