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Recent climate change forecasts have aroused growing interest in the influence of water scarcity and climate on agricultural production and irrigation practice. However, it is common in the economic literature to aggregate disparate crops when modeling irrigation choices. That approach confounds the crop-specific effects of climate and water scarcity that govern such choices. Given the sensitivity of agricultural production to water scarcity and climate, understanding their influence on irrigation choices is a key contribution to policy evaluation. This paper addresses the impact of water scarcity and climate on irrigation choices through estimated models of cropland proportion irrigated (PI), and crop-specific irrigation technology choice (TC) and water application rates (AR). This approach is applied to agricultural production data for major crops (orchard/vineyard, vegetable, wheat, alfalfa, hay, and pasture) on the West Coast (California, Oregon, and Washington). Crop-specific modeling provides information about the distributional impacts of agricultural policy and climate change. This advantage is particularly important for the diverse agricultural landscape of the West Coast, where the distributional impacts of policy can be complex. The most important policy implications that are found involve asset heterogeneity and the distributional impacts of agricultural policy. Several findings provide valuable information about how irrigators would respond and adapt to climate change. The current findings also lead to commonly advocated revisions to federal water subsidy policies. Some key differences between the irrigation choices of higher- and lower-value crops are also identified. Identifying these differences sheds further light on the distributional consequences of agricultural policy. Many findings from this research are crop-specific and will have a high degree of policy relevance to irrigation districts or other agricultural jurisdictions that cultivate some of the West Coast's major crops. Furthermore, the data used in this research has a large degree of variation in water scarcity and climate, making the findings applicable to other Mediterranean climates in the world. It is found that specific crops have a proclivity for certain irrigation technologies that can mitigate particular climatic stressors (i.e., frost damage and heat stress). For example, the results indicate that water pricing policies will tend not to encourage water conservation by technology adoption for many orchards, vineyards, and vegetable farms, thereby imposing pure costs to these producers. In essence, climate heterogeneity limits options available to farmers and reduces the set of production technologies that a farm can use. This finding exemplifies that with climate heterogeneity, the distribution of water policy impacts depends on prior land allocation decisions such as crop choices. Heterogeneity in land quality is also found to have important influences on TC. The effects of temperature on irrigation choices are found to be more profound than the effects of precipitation. Because of the large study region used, the effects of temperature and precipitation on irrigation choices are often found to be quadratic-like. These quadratic-like relationships reveal thresholds where irrigators begin to respond very differently to climate. However, this was not the case for all crops. Thus, it is demonstrated that the effects of climate on irrigation choices are crop-dependent. The results indicate that for several crops, the discontinuance of irrigation water (i.e., water supply or price uncertainty) creates an option value that delays and discourages adoption of water-saving technologies. The discontinuance of irrigation water is also shown to reduce water demand at the farm-level extensive proportion (i.e., PI) and crop-level intensive margin (i.e., AR). Water price is found to impact all three irrigation choices as well. Well depth is found to facilitate adoption of water-saving technologies for several crops. This paper demonstrates that irrigation choices are highly dependent on water scarcity and climate. Institutional arrangements, geographic qualities of the farm, and demographic characteristics of the farmer also exhibit important influences on irrigation choices. By using crop-specific equations, quadratic climate variables, and a study region with large variation in climate conditions, this research resolves many inconsistent findings regarding the determinants of irrigation choices. Furthermore, this study establishes a research agenda for crop-specific analysis of irrigation choices. Some of the estimated results warrant verification with further studies. Future crop-specific irrigation choice studies would benefit from panel micro data with improved land quality variables, and seasonal or monthly climate variables that are better able to identify the effects of climate stress (e.g., heat stress and frost damage) on irrigation choices.
