Interpreting Potential Groundwater Policies through Modeling of Market and Non-Market Benefits and Costs

Current policies leveraging financial incentives and improved irrigation efficiency to mitigate groundwater scarcity have not proven to curtail trends of resource depletion. Groundwater benefits cannot be appropriately valued solely on market forces, and so deeper policy consideration is warranted under a framework that considers the importance of groundwater across all its values to society. Understanding time preferences for groundwater management and preferences for alternative policies is vital to inform efficient policies. Furthermore, climate change remains politically controversial yet has important consequences for critical groundwater resources and their sustainable long-term management. Proliferating policy narratives concerning climate change could influence the way people think about managing groundwater resources. I present three empirical studies that address these issues. Chapter I examines irrigation efficiency technologies for improved outcomes using a market-based, spatially-dynamic optimization model to test the limitations of improvements alone and in tandem with typical environmental policy mechanisms. Improved efficiency induces some producers to plant more of water-intensive crops such as rice, and best-case improvements fail to counter trends of groundwater depletion over a 30-year horizon. Chapter II elicits public willingness to pay (WTP) for long-term groundwater management and for market and non-market groundwater services. I employ time-discounted choice models to endogenously estimate time preferences under different forms of discounting. This is the first non-market valuation to estimate heterogeneity in time preferences using flexible mixing distributions. I find significant WTP for water quality provision, buffer against long-term drought, jobs from agriculture, and provision of wildlife habitat that promotes fishing and duck hunting, while most people display evidence of hyperbolic or quasi-hyperbolic discounting. Individual parameter distributions for WTP and time preferences are not normally distributed. Chapter III continues the Narrative Policy Framework (NPF) tradition to test for systematic influences of narrative frames about climate change on elicited groundwater and policy preferences. In a Choice Experiment (CE), some respondents were exposed to a structuralist, culturally-biased narrative frame about climate change and groundwater resources. Using theories about cultural risk perception and motivated reasoning for systematic evaluation, I find evidence for a cultural incongruency effect but no evidence for a congruency effect. This suggests that people could respond more strongly to incongruence than to congruence in the case of groundwater policy preferences.