Projects Funded for -

Wildfire, Climate Change, and Moral Hazard in Adaptation

Severin Borenstein

The Potential for Bioenergy Production in California: A Real Options Analysis Assessing Key Policy Challenges

Gordon Rausser

Measuring the Effects of Climate Change and Ground-level Ozone on Agricultural Yields in China

Colin Carter and Dalia Ghanem

Measuring the Costs of Complying with California's Low Carbon Fuel Standard

Aaron Smith

Impact of and Adaptation to Climate Change Induced Water Scarcity in Southern California/Desert Agricultural Production Regions

Ariel Dinar


Specific Objectives of the Project
(1) Estimate impact of climate change induced water scarcity on agriculture in southern/desert regions of California;
(2) Model (in a normative framework) possible adaptation responses of agricultural growers across various farm types to water scarcity scenarios predicted to affect the region, and estimate the economic value of such adaptation practices;
(3) Infer the normative results by positively observing decisions of agricultural growers in a subset of the regions.

Project Report/Summary of Results
A preliminary review of the literature was conducted and a review paper was written and submitted to a technical journal; A Ricardian model to allow estimation of impact of climate change on agriculture in Imperial, San Diego, and Riverside counties was developed; Data files from the agricultural commissioner reports were identified for all individual farms in these counties; A questionnaire was developed and being cleared by HRB for phone interview with growers (300, 400, 400 in Imperial, San Diego, and Riverside Counties).
(1) A choice model at the county level was developed; a set of adaptation technologies and practices was identified as bundles of technologies and practices for each county; Using the same data sources as in (1), the data collection is about to culminate in July;
(2) The comparison between the Ricardian model with County fixed effects and the choice model will be conducted once preliminary results are available.

Immigration Reform and Agricultural Competitiveness

Philip Martin


Specific Objectives of the Project
Over half of California’s farm workers are unauthorized, prompting proposals for a 3-pronged immigration reform package that includes:
• enforcement measures to discourage the entry and employment of unauthorized foreigners,
• legalization for the 11 million unauthorized foreigners in the US, and
• new guest worker programs.
Agriculture is treated differently from other industries in immigration reform proposals. Agriculture is subject to the same enforcement measures as other industries, but unauthorized farm workers would have a unique path to legal status and agriculture would have a unique guest worker program. This project used research, education, and dissemination to assess the implications of current immigration patterns for the state’s agricultural competitiveness and the potential impacts of reform proposals on farmers, farm workers and communities.

Project Report/Summary
Immigration Reform: Effects on California Agricultural Competitiveness, is a three-pronged research, conference, and newsletter effort to understand how current migration patterns and proposed reforms would affect agricultural competitiveness, farm workers, and communities. Major outcomes in 2014-15 included:
• Analysis of how current immigration patterns affect crop choices and the potential impacts of immigration reforms, such as a $1 to $2 an hour housing allowance for legal guest workers in AgJOBS that would be offset by a $1 to $2 an hour reduction in the special minimum wage for guest workers
• Conferences that brought researchers together with policy makers and advocates to discuss immigration’s impacts in particular commodities and communities and to enable researchers to learn about the status of policy options being discussed.
• Rural Migration News summarized and analyzed significant developments each quarter in farm labor, immigration, and agricultural communities ( Rural Migration News, which has earned a reputation for accurate and reliable analysis, is read by 1,500 researchers and extension specialists, students, and policy makers and the media, and is often cited in academic journals.
In addition to dissemination via Rural Migration News, project-related papers were published in the AJAE, Choices, and ARE Update.

Efficiency Wages in the Temporary Labor Market

Jeremy Magruder, Lori Beaman, and Scott Ogawa


Specific Objectives of the Project:
To pilot an efficiency wage field experiment leading to a larger grant application using a large-scale provider of temporary labor in California.

Project Report/Summary of Results:
We engaged in initial, positive conversations with a partner firm, including the signing of a data agreement. These conversations were put on hold as that firm underwent a merger and restructured and then further delayed as our chief contact at that firm left for another position.

We are currently working to rebuild connections at the firm to explore the viability of the project moving forward. We are hoping to receive an extension of support to hire a graduate student GSR to work on rebuilding these relationships.

Dynamics of Mexico-to-U.S. Migration, Climate Change, and the Farm Labor Supply

J. Edward Taylor and Katrina Jessoe


Specific Objectives
To uncover long-term trends in the farm labor supply from rural Mexico and their implications for California farms and rural communities. This project has two components. The first is to continue our work “unpacking” a negative trend in the farm labor supply, which we identified using panel econometric methods with support from a Giannini Minigrant in 2013-14, and explore the implications for specific California crops, by integrating labor into a detailed crop production model. We will estimate the relative contributions of developments in Mexico, including the expansion of rural education and nonfarm economic growth; US border enforcement; drug-related violence along the US-Mexico border; and sector- and location-specific migration networks in explaining the significant decline in rural Mexicans’ probability of doing farm work. We will simulate the implications of this decreasing farm labor supply on specific crops (in collaboration with Richard Howitt and Josue Medellin). The second component (with Katrina Jessoe) will expand work initiated in 2013 on the impacts of weather shocks on labor allocations in rural Mexico, including migration to the US. Our early findings already have been presented at several conferences and workshops. They indicate that an increase in harmful degree days in rural Mexico, particularly at the start of the maize-growing season, negatively impacts both farm and nonfarm employment and increases emigration pressures. Both components will be the basis for constructing long-term projections of changes in the supply of farm labor to Mexican and US farms, the implications for California agriculture, and the role of immigration policy in an era of less abundant farm labor.

Summary of Results
Charlton (2014) and Charlton and Taylor (2015). They were presented at the UC Davis “Frontiers of Immigration International Conference” on January 22, 2015, and they appeared in The Wall Street Journal the following day. They also have been presented to grower and farm labor conferences, including the 2015 Oregon Wine Symposium, the Harvard University Farm Labor Challenges conference (November 2014), the “Farm Labor and the ALRA at 40” conference (2015), and the Banco de Mexico (2014).

In a related study (Jessoe, Manning, and Taylor), we find evidence that rural Mexicans are less likely to work locally in years with a high occurrence of extreme heat. This reduction is largely due to a decline in non-farm labor and wage work. Extreme heat increases migration within Mexico from rural to urban areas, particularly at the height of the growing season, and international migration to the U.S. Findings from this study were presented at the Agricultural & Applied Economics Association’s 2014 AAEA Annual Meeting in Minneapolis, and the Fifth World Congress of Environmental and Resource Economists.

Central Pivot Irrigation and Technology Switching: An Assessment from Space

Maximilian Auffhammer


Specific Objectives of the Project

The objective of this minigrant project was to collect information on central pivot irrigation (CPI) in California through automated analysis of satellite imagery. We have successfully mapped the extent all detected CPI fields in California, along with a web service for vegetation analysis from NASA satellite imagery. The web service, called an Application Programming Interface (API), is useful for agricultural applications beyond the scope of this project.


Auffhammer_Fig1.jpg The CPI fields were identified through kernel density differencing. The difference between a spatial convolution of circles and squares was calculated for all available NASA Landsat 8 annual composites (2013/2014).
The difference, in theory, will be greatest at the center of circles in the images. The convolution was run for plot sizes between 200m and 600m. The results served as a screening dataset, which was subsequently verified by hand using halfmeter, commercial satellite imagery supplied by DigitalGlobe. Ultimately, there were 121 CPI fields detected in the state of California. A sample is displayed in the first
figure, and a web map is available here (along with the generating code and raw data).

Auffhammer_Fig2.jpg An additional webservice was built to calculate the vegetation density for any polygon and for any month between January 2000 and the present from NASA satellite imagery. The Enhanced Vegetation Index (EVI) is a measure of vegetation density, derived from monthly, cloudfree composites of NASA Landsat 7 scenes. The service is technically a Representational State Transfer (REST) API. The HTTPS GET request accepts a bounding box and a date range, and returns a series of EVI measurements useful for CPI analysis. Specifically, the service returns three measurements for both the inner circle and remaining corners of the CPI field: (1) the average EVI, (2) the standard deviation of the EVI, and (3) the area in meters squared. These three measures, when taken together, can calculate the test statistic to determine whether the vegetation was significantly different within the inner circle, relative to the rest of the plot. This test statistic is sufficient to identify whether CPI was used at any given month. Our initial analysis reveals that CPI fields are converted frequently to furrow or other irrigations systems there is a significant amount of switching.

Project Report/Summary of Results

The graph below shows the time series decomposition of the EVI series into its trend, seasonal, and idiosyncratic components. The returned series (which is graphed using code in the client library of the opensource repository) clearly shows an increase in vegetation intensity for this particular field in the past few years. This CPI field is 455,948m 2 in size with 171 observations between 20010101 and 20150509. There is a seasonal component that is bimodal. This type of analysis can be replicated for all 121 CPI plots in California and any arbitrary extent in the world.


Extensions and associated services

This online database with structured access points is highly useful for climate researchers. The service enables research into the behavior changes over time of agriculturalists in response to exogenous factors. One such factor is water level. A parallel endpoint (developed separately) tracks surface water for any polygon in the world over time. These services, when taken together, offer a powerful set of tools to show the behavioral response to water scarcity in California.

Can Public Institutions Resolve Information Asymmetries? Historical Evidence from the French Wine Market

Pierre Mérel


Specific Objectives of the Project

The objective of this project is to empirically investigate the role of public certification schemes in resolving information asymmetries in vertically quality-differentiated markets, using the French wine market as a case study.

When quality-differentiated products are sold by informed sellers to uninformed buyers, bad products may drive out good products from the market, resulting in an inefficient equilibrium where only low-quality products are sold. Although a potential for mutually beneficial trade in high-quality varieties exists, such potential is not realized because discriminative buyers cannot be certain of the quality of the goods they are purchasing. Certification schemes aimed at reducing information asymmetries between sellers and buyers can theoretically remediate the lemons problem.

We wish to test this hypothesis in the context of wine production in France over the course of the twentieth century. More specifically, we will investigate the extent to which a series of laws enacted throughout the first half of the twentieth century to reduce information asymmetries regarding the origin and quality of wines and spirits (in 1905, 1919, 1927, but most importantly in 1935) can be related to the emergence of a strong high-quality wine market. Our hypothesis is that the enactment of the 1935 law, which essentially codified the use of wine geographical denominations, allowed a segmented high-quality market for fine wines to emerge, resulting in higher welfare and higher market value for wine products in general.

We will use department-level data on wine acreage, production, and value, from 1925 to 1955 to test the hypothesis that the 1935 law fundamentally altered market structure and led to an increase in market value through product differentiation (leading to a separating equilibrium).

Project Report/Summary of Results

We have encountered delays in obtaining the data and are finalizing our data entry process (from paper yearbooks). We have managed to get out data without spending the funds. Some additional yearbooks have been released by the French statistical office (INSEE) during the past year, while others were obtained from the Cornell library and the UC Berkeley library.

California Urban Water Demand: Estimating the Effects of Price & Nonprice Conservation

David Sunding


Specific Objectives of the Project
The objective of the project was three-fold. First, we constructed a novel panel data set tracking urban water retailers’ price schedules, water demands, non-price conservation activities and other demand factors. Second, we estimated the price elasticity of demand; the wide coverage of retailers across the state allowed for estimating spatial heterogeneity in price elasticities. Third, we used these estimates to evaluate the potential reliability benefits of alternative water supply investments.

Summary of Results
We estimate water supply reliability benefits by evaluating welfare losses from annual water supply disruptions that are mediated through urban water utilities with substantial fixed costs. Our analysis considers spatially heterogeneous water demand functions and encompasses two features not typically addressed in the literature on water shortages: (i) welfare changes are measured from baseline water rates that are not allocatively efficient; and (ii) welfare losses are compounded by the need for water utilities to recover fixed costs. We exploit panel data on California urban water suppliers over the period 1996-2009 to estimate regional price elasticities of residential water demand. We use our estimates to examine the welfare consequences of an annual water supply disruption in California. The estimated welfare loss ranges from an average of $1,500 per acre-foot under a 10% shortage to over $5,000 per acre-foot under a 30% shortage in water supply. The spatial distribution of welfare impacts exhibits substantial variation across regions, which highlights the need to consider decentralized impacts of water supply disruptions in the design of efficient rationing rules. These results inform benefits analyses of water supply infrastructure/ conveyance projects that serve both urban and agricultural users, most notably the Bay Delta Conservation Plan.