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Seminar: An Ex Post Analysis of the Economic Impacts of Reduced Water Supply Using Quasi-Experimental Methods: the Case of the Sacramento-San Joaquin Delta

Date(s): November 28, 2012, 2:00-3:30pm

Location: Room 6124, EPA West Building, 1301 Constitution Ave., NW, Washington, DC

Contact: Carl Pasurka, 202-566-2275

Presenter(s): Cameron Speir (National Marine Fisheries Service, Santa Cruz, CA)

Description: We evaluate whether reductions in irrigation water deliveries from state and federal water projects to farms in the California’s San Joaquin Valley resulted in adverse economic impacts on the local economy. Drought-induced water supply restrictions in 2007 and 2008 and additional restrictions in 2009 to improve threatened fish habitat were limited to specific areas that receive water from the Sacramento-San Joaquin River Delta and thus not distributed evenly throughout the study area. We compare employment patterns from 2006 to 2009 in affected areas to adjacent, unaffected control areas. The main features of our approach are that we use observed data (rather than input-output techniques) on employment, income, and other economic activity and that the analysis occurs at two different levels of spatial resolution that is appropriate for the water supply characteristics of the San Joaquin Valley. If water supply restrictions caused large-scale regional economic impacts, we would expect to see large reductions in employment, payroll, and retail sales in affected areas relative to areas not dependent on Delta exports for irrigation water. Our results indicate some direct impacts in the form of lower agricultural employment and wage income, though this result is qualified. We are unable to detect any indirect or induced impacts in non-agricultural employment and wage income or taxable sales data.

Seminar Category: Environmental Economics