Abstract
The agriculture of the Texas High Plains (THP) region is primarily dependent on groundwater irrigation. Changing weather patterns along with competing demands for water resources and other anthropogenic effects have dramatically increased withdrawals from the Ogallala aquifer. In addition to on-farm changes, policy tools based on off-farm mechanisms are equally indispensable in addressing sustainable groundwater use in the THP. One such policy tool is water pricing using estimates of price elasticity of irrigation water demand. This paper estimates the elasticity of irrigation water demand in the THP and assesses the influence of water price on major inputs used in dominant irrigated crops such as corn and cotton. Using the translog profit function on an annual county-level dataset of THP crop production, spanning 23 years (1998–2020), we find that irrigation water demand is price elastic for cotton ( η = – 1.58) but inelastic for corn ( η = – 0.81). Our findings suggest that a non-uniform pricing policy could be a useful tool to promote the efficient use of groundwater for irrigation.