Essays on the Economics of Agricultural and Residential Water Managemen

Ensuring the efficient allocation of water resources among end users has become crucial in light of increasing climate variability and the high capital and environmental costs of developing new supply. However, within the two largest sectors of water consumption --- agricultural users and residential users --- the different nature of water use and governing institutions gives rise to different challenges in allocating water across competing demands. This dissertation comprises two essays, both case studies evaluating policies to improve water management in each sector respectively. Informed by different settings, I use novel data and methods to estimate impacts of the distinct reforms. The two chapters provide lessons about how policymakers in either sector can improve water management in the future.;Chapter 1 measures the monetary value created by clarifying property rights for water within the agricultural sector, through a legal process of 'water right adjudication.' Between 1987 and 2014, the Snake River Basin Adjudication determined who had legal rights to use water and what trades would be hydrologically permissible, covering 139,000 water rights and 90% of Idaho's water use. Using differences in the timing of adjudication between different sub-basins, I identify the medium-run impacts of this adjudication. I find that adjudication caused a 140% increase in the frequency of water right trading, that these trades moved water to relatively more productive parcels of land, and that adjudication increased total crop acreage by 3.9%. To evaluate whether these benefits justify the $94 million Idaho spent in legal proceedings during the adjudication, I use a revealed preference framework and exploit quasi-random variation in federally-administered crop insurance prices to monetize the value of changes in crop choice after adjudication. I find that the one-time adjudication of the Snake River Basin increased the value of Idaho's agricultural output by $250 million per year.;Chapter 2 studies policies adopted by a large Californian municipal water utility to achieve their State-mandated target of reducing residential water use by 25% during the recent 2011 to 2017 California drought. Because the municipality and State simultaneously adopted many different reforms to reduce water use, it is unclear which particular policies drove the observed conservation. My co-authors and I use hourly micro-data from over 86,000 single family households between 2013 and 2016 to disentangle the impacts residential water use of these different policies. First, we find that a 10% increase in marginal rates is associated with a decrease in household water use of 20 gal/day. Over our sample period, these rate changes are responsible for saving 25 gal/day. Second, reducing the number of days households are allowed to use water outdoors results in a substitution of water use from banned days to the remaining non-banned days. However, there is also a persistent decrease in water use by 6% (30 gal/day) after this policy change, particularly during hours when outdoor use was never permitted, suggesting the policy change might have increased compliance with the regulation. Thirdly, water use declines by 74 and 44 gallons/day after the announcement of a State of Emergency' and 'Mandatory Water-Use Regulations, respectively. These major State-level announcements appear to induce interest in the drought, as measured by Google searches. A mediation analysis shows that our measure of drought awareness is highly correlated with water use, but, after controlling for city and state policies, this correlation disappears. Finally, we find that adoption of city-funded rebates for water-efficient toilets and lawn replacement leads to substantial water savings (both 55 gal/day); however, the aggregate impacts of the program are negligible due to low-take up rates.