*7.2. Conserving Water Resources*

Along with land allocation, water applied for farm irrigation can be managed at the farm level. More sources for water supply may provide better access to water for irrigation purposes and producers may have more flexibility in irrigating crops while considering the real-time soil and crop conditions [78]. According to the conventional production economic theory, a higher input price decreases the amount of input use. In this case, a higher water price should reduce water use [61,62]. The opposite findings from our analysis definitely need close scrutiny, while they might be plausible as an overall effect given the low values of water prices. There are some facts behind these findings: (1) most of the farmers are groundwater users rather than surface water users; (2) some surface water users may have a fee-based surface water delivery system and do not pay a marginal cost for additional water; and (3) surface water use may be highly dependent on the producers' surface water rights, regardless of whether they pay a fee or an additional cost for additional units of surface water [79]. In addition, an increase in water application on per acre basis may be possible if farmers adjust their mix of crops toward more water-consuming crops or varieties, or because yield or revenue can be increased [75].

Meanwhile, the total price effect of surface and groundwater on water use in the multi-crop system is negative and consistent with the previous literature [80]. Pfeiffer and Lin [62] found an increase in the energy price of \$1 would decrease groundwater extraction by 5.89 acre-feet per year for an individual farmer in Kansas. Our overall marginal effect is almost doubled, while the area of a typical farm planting multiple crops in their study is less than half of the total area of planting both corn and soybeans in our study. In another study, Hendricks and Peterson [61] found the total elasticity of water demand was −0.10 based on Kansas farm irrigation. As a comparison, Pfeiffer and Lin [62] found an elasticity of −0.26. Therefore, our findings show a modest overall effect of water price on water conservation since we just included two crops, with one being water-intensive and the other being less water-intensive, in our multi-crop production analysis.

Advanced irrigation systems have been promoted in the past decades as a way to conserve irrigation water, while recent studies have reported mixed effects [75,81]. Jevons' Paradox or the rebound effect [82] of an efficient irrigation technology adoption points to an increased water use as a result of crop choices toward more water-intensive crops and an expansion of irrigated acreage [83]. Balanced by both extensive and intensive margins, the rebound effect can be small, moderate, or even larger than 100%. As a typical issue in an irrigated production system with multiple crops, the rebound effect is a serious consideration and it might counteract the water reduction effect of adopting water conservation technologies.

Producers' experienced and perceived climate variability may have a salient influence on water use [5,18]. Similar to the effects of climate risks, a higher variability in rainfall and temperature may ultimately change the real water demand of different crops [51]. To achieve a certain yield goal, farmers routinely want to satisfy the water demand as an attempt to reduce production risks if possible during dry growing seasons, and this is even seen in arid areas [84]. Though the impacts of climate variability on different crops can be different, the effects of the farmers' perceptions may not be proportional to the water demand of different crops [6]. As a result, the effects of climate variability may be mixed and combining those of rainfall, temperature, and others. Additionally, the threshold of climate variability may be of great significance and the effects can depend on the crop-specific and baseline climate conditions [18].
