Private (On-Farm), Public, and Political Adaptation to Climate-Change-Induced Water Scarcity: Evidence from California

Recognizing that private (on-farm), political, and public actions jointly will be critical to addressing climate change and water scarcity in California's agriculture sector. This research project is directed by a team of economists and political scientists and is funded by USDA-NIFA. It is aimed to understand how on-farm, political, and public adaptations each contribute to the value of farming activity and resiliency in California in light of climate change-induced water scarcity.

Historically, California's agricultural sector has attempted to manage climate change-induced water scarcity through various private and public adaptation forms. Studies indicate that individual farmers faced with reductions to their water assignments and/or uncertain future water availability pursue several adaptation strategies. For example, farmers change their management practices to accommodate less water and minimize losses; alter their cropping patterns, such as switching to crops that need less water; fallow portions of their land; and (in extreme circumstances) sell land, reduce the scope of their agricultural operations or go out of business. Farmers can also invest in new water-saving technologies, such as advanced irrigation technologies, use marginal (wastewater) water sources, and dedicate parts of their farms to reservoirs to store water in the winter for use in the summer. It has also been observed that farmers amend their individual and collective efforts to create or adjust public policies, programs, and regulations to address the climate change impacts on water scarcity they face. Beyond on-farm efforts described above, farmers frequently turn to their legislative representatives and state and federal regulators for assistance in managing water scarcity challenges they face in the short and long run. Efforts by farmers to engage the political system as constituents exercising their democratic rights aim to enhance the effectiveness of private activity. These efforts, referred to as political adaptation, can take several forms. Farmers, acting individually or through industry organizations, make campaign contributions to support like-minded elected officials; petition legislators and state regulators for a favorable disposition of claims or cases; or lobby legislatures and state agencies for policy change by testifying at hearings and meeting with elected officials and their staff. We have also observed various government efforts, coined public adaptation, that amend the resources and incentives available to farmers facing water scarcity. Examples include investments in research and development of new irrigation technologies, establishing water restrictions, banning crops in certain regions, subsidizing crop failure, building new infrastructure, introducing incentive packages for participation in water trade or managed aquifer recharge, developing water management information that is made free as a public good, and expanding extension programs. As such, these efforts powerfully influence the character and profitability of private agricultural activity. We will use a Ricardian framework, which presumes that the effects of environmental shocks (including climate change-induced water scarcity), farmers' on-farm and political adjustments, and policy responses to shocks will all be capitalized on changing land values.

Thus, we also account for farmers' investments in political actions (political adaptation) and the value of changes in public policies (public adaptation) and include these measures in Ricardian models that have been used in the past to estimate the impact of on-farm adaptation to climate change in the agricultural sector.

The overall objective of this project is to improve the understanding of how multi-level adaptation interventions operate in parallel over time and space so as to enhance the resiliency of the irrigated agricultural sector of California. To achieve this goal, we focus on two objectives: (1) Examine how farmers are adapting to changes in their economic environment through on-farm, public, and political adaptations. And (2) Evaluate how public adaptation explains interactions between farmers' private investment in on-farm adaptation, their political action, and legislative responsiveness under a changing climate. We apply the Ricardian framework, using data from 58 California counties to empirically quantify the impact of each of the mentioned three adaptation options available to farmers on the ability of the irrigated agricultural sector in California to reduce the negative effects of climate change.