Farm-level irrigation and the marginal cost of water use: evidence from Georgia

We create a proxy for the cost of irrigation water in Georgia from a sample of Georgia irrigators by investigating the marginal cost of pumping groundwater. We then combine this proxy with agronomic and climatic variables to estimate the response of agricultural water use to differences in the marginal cost of irrigation. The results show that pumping costs are a significant determinant of water use, and imply that agricultural water use would be moderately affected by institutional changes that would explicitly price water.