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Abstract There is limited empirical evidence on the value of formal property rights to natural resources when they are not transferable, and there is regulatory uncertainty about enforcement. This paper takes a hedonic approach to understanding how three core features of groundwater property rights—access, allocation, and seniority—are capitalized into agricultural land values in the High Plains Aquifer region of Kansas. We find that groundwater access rights confer an average land value premium of 71%, or $1445/acre in 2019 dollars. Water rights having larger allocations and more seniority are more highly valued in the land market. The seniority effect is small but is consistent with more junior rights facing greater regulatory risk of curtailment. Taken together, these results suggest that the land market capitalizes constraints to groundwater pumping provided by groundwater property rights. We use our empirical estimates to quantify the distributional costs of modifying existing patterns of pumping, a common challenge of groundwater management organizations seeking to improve the sustainability of extraction.
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This content will become publicly available on June 26, 2026
Short Communication: A Groundwater Market Model
We introduce the problem of groundwater trading, capturing the emergent groundwater market setups among stakeholders in a given groundwater basin. The agents optimize their production, taking into account their available water rights, the requisite water consumption, and the opportunity to trade water among themselves. We study the resulting Nash equilibrium, providing a full characterization of the 1-period setting and initial results about the features of the multiperiod game driven by the ability of agents to bank their water rights in order to smooth out the intertemporal shocks.
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- Award ID(s):
- 2407550
- PAR ID:
- 10610573
- Publisher / Repository:
- Society for Industrial and Applied Mathematics
- Date Published:
- Journal Name:
- SIAM Journal on Financial Mathematics
- Volume:
- 16
- Issue:
- 2
- ISSN:
- 1945-497X
- Page Range / eLocation ID:
- SC51 to SC63
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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