Climate change has brought warmer temperatures, shifts in precipitation patterns, sea level rise, and an increase in extreme weather events to agricultural regions globally . Coastal regions are particularly at risk, since they often feature micro-climates conducive to the development of high-value crops that are difficult to grow in other locations. Rising temperatures and increased variability in precipitation can reduce the agricultural productivity of these delicate products, especially if the security of water resources is unknown. Water supply issues are magnified in coastal locations, as groundwater resources are subject to seawater intrusion, exacerbated by the over pumping of water . If a region is reliant on groundwater that suffers from seawater intrusion, there are a limited number of strategies available to improve salinity conditions. Options hinge on actively reducing the amount of groundwater pumping or increasing the recharge of higher quality water into the groundwater basin. This may involve pricing groundwater or setting limits on extraction, building infrastructure that improves recharge, or finding additional sources of irrigation water. One emerging tool is to use treated municipal wastewater, or recycled water, to reduce the reliance on groundwater pumping and increase recharge to the underlying aquifer. As of yet, this is not a well-studied option, because there are limited micro-level water-use data available to credibly estimate individual grower impacts. In addition, recycled water itself is not typically of the highest quality, and is an expensive, “last-resort” solution that has not been implemented in many locations. However,hydroponic vertical farm in the uniquely profitable climates of coastal agricultural regions, recycled water has started to emerge as a potentially economically feasible adaptation strategy. Moreover, the possible benefits are expected to increase under climate change.
This paper rigorously investigates the viability of recycled water in a high-value coastal agricultural region as a mitigation strategy for drought and over-pumping of groundwater. I use predicted crop choices to estimate welfare changes due to recycled water access, using a panel mixed logit choice model. The crop choice model is also used to estimate the damages associated with high salinity conditions. I then examine the impacts that recycled water has on improving the underlying water quality of the aquifer, using staggered difference-in differences and event studies. I evaluate the effects for growers that receive recycled water, as well as those who do not have access to recycled water, but farm in the same region. I then discuss conditions under which recycled water may be economically viable. To my knowledge, this is the first economic study of a real-world implementation of recycled water in agriculture. The Pajaro Valley, located on California’s central coast, offers this critical opportunity to estimate the effectiveness of recycled water. Best known for its berries and vegetables, this region has documented seawater intrusion issues since the 1950s, due to its dependence on groundwater for irrigation and its proximity to the coast. With its foggy, temperate climate, growers in the highly productive valley are motivated to find solutions that allow them to continue growing high-value, salt-sensitive produce. The local water management agency developed a groundwater pricing scheme to fund a recycled water program, delivering municipal treated wastewater from the nearby town to growers along the coast experiencing high salinity. As part of their duties, the agency has been extensively monitoring groundwater quality, pumping, land use, and delivered water. This includes a rich network of monitoring wells, which enables the observation and interpolation of water quality across space and time. While their production of especially valuable crops means that Pajaro Valley is an early adopter in using recycled water, this analysis provides a useful template for other coastal agricultural regions likely to suffer from seawater intrusion in the coming decades. I find that small quantities of recycled water provide substantial benefits to the Pajaro Valley.
Growers who receive recycled water deliveries are able to grow higher-value, salt sensitive crops at increased yields. Their direct benefits, at $16 million annually, are higher than the management agency’s annual program costs. In addition, the groundwater quality beneath parcels that receive recycled water deliveries substantially improves, primarily in years where groundwater salinity is otherwise much higher than average. Neighboring parcels that do not directly receive recycled water deliveries also see their groundwater quality improve in years of high basin-wide salinity, although the effects attenuate quickly. Conservatively, these water quality benefits add up to an additional $10.8 million in high salinity years. While all growers benefit from the recycled water program’s prevention of future seawater intrusion, the current beneficiaries of the recycled water program are growers located nearest to the coast. Overall, this paper has two major contributions: the first quasi-experimental, empirical assessment of the welfare effects from the implementation of a recycled water program, and the first study to propose and analyze recycled water as a mitigation strategy for salinity or groundwater overdraft. While there is no current economic literature on the implementation of a recycled water program, Ziolkowska and Reyes discusses socioeconomic factors that influence desalinization plant development. There are also several studies using survey methods to elicit a willingness to pay for recycled water or for products grown with recycled water. A few studies explore consumer concerns about the use of treated wastewater in agricultural production . Menegaki, Hanley, and Tsagarakis surveys agricultural producers on their willingness to pay for recycled water of various quality in Greece, when faced with no restrictions in freshwater supplies. More closely linked to our work, Iftekhar, Blackmore, and Fogarty use contingent valuation and contingent behavior methods to elicit willingness-to-pay estimates for recycled water in water-constrained Perth, Australia, finding that agricultural users and horticulturalists have the highest valuation at $91 AUD/acre-ft. Seawater intrusion is a growing problem for coastal agriculture, affecting many regions globally . There is a small but growing literature on the economic damages from saline irrigation water. Mukherjee and Schwabe conduct a hedonic analysis of farmland sales in California’s Central Valley to estimate the marginal value of changes in groundwater salinity to irrigated agriculture. Rabbani, Rahman, and Mainuddin use survey methods in Bangladesh, examining severe damage to rice production due to a cyclone-induced seawater intrusion event. They find that average households lost 43-45% of their annual income, and salt-tolerant crops were not able to overcome the acute damage. Other research estimates salinity damages using structural approaches , since high-quality seawater intrusion data is limited.
Currently, little research has been done to study ways to mitigate damages from salinity. There has been some work done to estimate the optimal groundwater extraction under seawater intrusion , as well as under saline soil conditions . Direct damages from groundwater overdraft can be tricky to measure, since depletion of an aquifer typically occurs over a long time horizon. There is excellent work on the externalities associated with extraction and water supply reduction . Other research is focused on the economic damages from land subsidence, where the land surface sinks due to reduced groundwater tables. Wade et al. studies land subsidence in Virginia, finding that coastal pumping invokes the greatest externality, but inland rural communities experience the highest damages. Several policies have been proposed to overcome this market failure,nft vertical farming including water prices and markets or restrictions on groundwater pumping . While often effective mechanisms, water prices and restrictions are politically unpopular. This work proposes a new policy mechanism to reduce groundwater overdraft: recycled water as an alternative water supply. Results provide valuable insights for coastal regions experiencing seawater intrusion, but also for other locations affected by water quality or supply constraints. With sufficient treatment, recycled water programs can provide an additional clean source of water to also combat soil salinity, or other types of groundwater contamination. In fact, 20% to 50% of irrigated agriculture worldwide is already negatively impacted by salinity . Currently, there are recycled water facilities operating in California, Arizona, Texas, Florida, and Australia, and programs are being considered in water-stressed regions globally. More broadly, this analysis has important policy implications for groundwater regulation. Many water basins around the world have already been stressed by persistent over-pumping of groundwater . In California, groundwater issues are at the forefront of water policy debates, where on average groundwater accounts for 40% of the state’s agricultural water supply. California’s Sustainable Groundwater Management Act of 2014 requires over drafted basins throughout California to reach and maintain long-term stable groundwater levels and correct undesirable outcomes associated with pumping over the next 20 years. The legislation includes specific mandates to local groundwater agencies to address seawater intrusion. Evaluating the possible benefits of an alternative water supply is critical to informing optimal groundwater regulation. The paper proceeds as follows. Section 2 describes the background and policy context, while Section 3 describes the data and descriptive statistics. Section 4 outlines the crop choice model and results for estimating the direct benefits of recycled water. Section 5 presents the specifications and results for the indirect benefits of recycled water. Section 6 evaluates Pajaro Valley’s program and discusses the feasibility of recycled water in other contexts. Section 7 concludes. In coastal regions, underground freshwater aquifers and seawater are not typically separated by an impermeable boundary. Instead, they coexist, with the seawater underlying the freshwater, since the salts in seawater give it a higher density. The seawater “toe” describes how far inland the saltwater layer extends below the freshwater aquifer.This frequently occurs when irrigation tube wells are drilled and users pump groundwater at a rate faster than the rate of recharge; i.e. more water leaves the aquifer than enters from rainfall or agricultural runoff.
When groundwater is over pumped, the pressure causes cones of depression to form, and seawater starts to enter the freshwater zones. This issue is exacerbated with sea-level rise, because the increased ocean pressure extends the seawater toe further inland, putting more of the aquifer at risk of seawater intrusion. In the Pajaro Valley, seawater intrusion has been documented since 1951, shortly after irrigation tube wells were introduced in the region. With little rainfall during the primary growing season, and surface water making up 1.6% of irrigation water sources, almost all irrigation water is from groundwater pumping. On average, 55,000 acre-ft of water is pumped annually. This is nearly twice the sustainable yield of the basin, meaning that only half of the extracted groundwater is replenished through rainfall or from irrigation runoff. These groundwater withdrawals, combined with the proximity to the coast, have resulted in severe seawater intrusion. The extent of the intruded region has increased seven-fold since it was first documented. Seawater intrusion in the Pajaro Valley, on average, moves inland approximately 200 ft/year, and renders 11,000 acre-feet of water unusable annually . The over pumping of groundwater and resulting seawater intrusion has led to salinity issues that currently impact crop production and threaten the stability of the basin’s future water supplies. In 1980, the California Department of Water Resources listed Pajaro Valley as one of 11 water basins threatened by severe overdraft, out of 447 total basins . The severity of the overdraft led to the development of the Pajaro Valley Water Management Agency in 1984, to develop conservation programs and manage water resources. Under the Sustainable Groundwater Management Act, PVWMA has been tasked with bringing the groundwater basin into “balance” by 2040, such that groundwater extraction does not exceed water recharge into the aquifer. While the management agency is encouraging water conservation in the form of improved irrigation efficiency, their main projects are in the development of alternative sources of water and promoting its recharge into the basin. The primary source of alternative water supplies to combat seawater intrusion comes from a treated municipal wastewater facility built in the town of Watsonville, along with limited runoff from nearby wetlands. Both of these projects are limited in scale, and are described in more detail below. In total, they have the capacity to provide approximately 7500 acre-feet of water annually , which is equivalent to 13% of the annual groundwater pumping in the region, although annual deliveries have not yet exceeded 5500 acre-ft. The total annual quantity of recycled water delivered can be found in Figure 3.1. Since the recycled water program can only provide a limited amount of the irrigation water requirements of the Pajaro Valley, as a means to allocate the limited recycled water supplies, the agency created a “Delivered Water Zone” .