Until the Well Runs Dry: The Role of Freshwater Source in the Effect of Drought on Agricultural Decision-Making

Abstract: The purpose of this thesis is to explore the role of freshwater source in the economic de- cisions made by farmers in response to drought. Although groundwater and surface water sources have remarkably different characteristics, the question of the effect of water source on irrigation decisions has largely been ignored. Because of variations in climate regionally in the U.S. state of Kansas, different parts of the state have nearly exclusive access to either surface water or groundwater. This climatic anomaly allows for the comparision of two kinds of farm- ers: groundwater farmers and surface water farmers. I utilize a panel data set of 18,710 wells to compare the amount of irrigation applied and the likelihood of upgrading to more efficient irrigation technology between groundwater farmers and surface water farmers. Groundwater farmers were found to respond to a 1% increase in drought with a 0.3% increase in irrigation from the median value, while surface water farmers were found to respond to a 1% increase in drought by reducing irrigation by 4.8% from the median value. The results do not indi- cate asymmetric drought responses between surface water and groundwater farmers in their likelihood of upgrading to more efficient irrigation technology. This thesis concludes with a discussion of limitations, generalizability, and policy implications.