External Costs of Climate Change Adaptation: Agricultural Wells and Access to Drinking Water

Abstract

Actions to mitigate the costs of climate change may exacerbate existing externalities. We study this in the context of groundwater in California, an open-access resource, by evaluating if averting behaviors taken in response to annual fluctuations in local heat and surface water scarcity lead to groundwater depletion and drinking well failures. Using the population of geocoded groundwater wells, we find that the surface water reductions and extreme heat experienced in 2021 lowered the groundwater table by 2 feet and 8 inches, respectively. This leads to drinking well failures in disadvantaged communities, with surface water curtailments and heat increasing failures by 4 and 5 percentage points. We show that agricultural groundwater pumping and well construction drive these external costs. These findings highlight that openaccess management of groundwater may exacerbate inequities in the ability of disadvantaged communities and future generations to buffer against weather shocks.