UCR Water Seminar by Dr. Michael Hanemann

There is concern to reduce the amount of water used for growing crops in California. In principle this could be brought about by irrigating fewer acres, by growing different crops, and/or by applying less irrigation water per acre. A common belief among economists is that these changes would be induced if irrigation water cost more. This is true in economic theory. I argue that it is not true in practice. I explain why the assumptions made in economic theory do not hold in practice, leading to the likelihood that over-irrigation of crops may not be economically unreasonable. The main implication for policy is that focusing on the pricing of water as a policy tool is unlikely to be adequate.

ABOUT THE SPEAKER:

Michael Hanemann is a professor of economics with the W. P. Carey School of Business and a Julie A. Wrigley Chair in Sustainability in the School of Sustainability at Arizona State University. He is an environmental economist who works in the areas of water economics and policy, climate change and non-market valuation. He is also the director of the Center of Environmental Economics and Sustainability Policy at ASU. Prior to ASU, he was a Chancellor's professor and professor of environmental and resource economics in the Department of Agricultural and Resources Economics at University of California-Berkeley, where he served from 1968-2011. Professor Hanemann is a member of the National Academy of Sciences.