Concern about sustained availability of fresh groundwater for agricultural use in the Mississippi Alluvial Plain (MAP) mounts as groundwater levels decline. We evaluate the elasticities of demand for groundwater and other agricultural inputs, as well as the overall and output-specific economies of scale for four major irrigated commodities (rice, corn, soybeans, and cotton) in the MAP region. Additionally, we investigate the impacts of two groundwater management policy scenarios, including increasing pumping cost and groundwater use restrictions, on irrigation behavior. The results show price elasticity of demand for groundwater to be −0.13−0.13, indicating that it is inelastic, and an increased cost of pumping will not significantly [...]
