School of Public Policy

Left in the Dust? Pecuniary and Environmental Externalities in Water Markets

by Dr. Eric Edwards, University of California, Davis

Wednesday, October 29th | CHASS INTS 4146

About the Seminar:

The use of markets to reallocate water in arid regions has elicited political criticism for reducing agricultural output and causing negative environmental effects. We develop a general equilibrium model to formalize arguments about how liberalizing water trade creates pecuniary and environmental externalities, and then test the model’s predictions using synthetic control and difference-in-differences analysis of the largest ever water sale agreement in the United States. Our results show declines in agricultural employment and increased dust pollution in the water-exporting region. Back-of-the-envelope calculations suggest health costs due to increased PM 2.5 are high, but do not exceed transfer revenues.

About the Speaker: 

Dr. Eric Edwards is an associate professor in the Department of Agricultural and Resource Economics at UC Davis. His work in agricultural and natural resource economics focuses on groundwater governance, historic agricultural development, and water rights and markets. His recent publications examine the economic outcomes of formal water right settlements on American Indian reservations and the environmental justice outcomes of saline lake desiccation. His work has been funded by agencies such as the U.S. Department of Agriculture, National Oceanic and Atmospheric Administration, and National Science Foundation. He holds a Ph.D. in Economics and Environmental Science from UC Santa Barbara. Prior to UC Davis, he was an assistant professor at Utah State University and an assistant and associate professor at NC State University.

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