The first essay compares six common models, linear, quadratic, Cobb-Douglas, translog, logarithmic, and transcendental, to estimate wheat yield and area functions for Saudi Arabia. Data cover 1990-2016 for all the variables that affect wheat supply. After testing the models using Box-Cox, multicollinearity, and autocorrelation tests, we decide that the Cobb-Douglas models provide the best fit for both yield and area. We find the price elasticity of wheat is inelastic. Yield price elasticities are more inelastic than area elasticities. The impact of government policy number 335 has a larger effect on area than yield. The cultivated area of wheat, the one-year lag of yield, and the number of machines per hectare are the most influential factors affecting wheat yield. The primary factors influencing the area models are a one-year lag of both cultivated area and yield, as well as the number of machines per hectare. The second essay estimates the residual demand elasticity that rice exporters face in Saudi Arabia. The inverse residual demand methods, as proposed by Reed and Saghaian 2004, are used for rice exporters to Saudi Arabia during the period 1993-2014. Estimation results of the elasticities of the residual demand indicate that Australia, India, and Pakistan enjoy market power, while Egypt faces a perfectly elastic demand curve. We find Thailand and the US had positive inverse residual demand which means they also have no market power. The last essay is about the virtual water trade in Saudi Arabia. Using the concept of virtual water introduced by Allan 1994 and developed by Hoekstra and Hung (2002), we estimate virtual water trade for 20 crops of Saudi Arabia during 2000-2016. Our result shows the average virtual water trade was 12.5 billion m3/year. Saudi has net virtual water imports, with the most significant virtual water imports coming from cereals & alfalfa and vegetables; and there is net virtual water export of fruit. Saudi virtual water trade reduces pressure on water resources by 52%. Distance plays a role in Saudi virtual water export; we found that more than 90% of exports go to neighboring countries, including 45% to GCC countries. More than 30% of virtual water imports come from Europe. A Gravity model is used to investigate whether water scarcity variables influence trade. We compare the OLS, Fixed effects, Random effects, and PPML estimators to get the best model. The AIC, and tests for multicollinearity, and heteroskedasticity assist in determining estimation procedures and the final models. We cluster the errors by distance to improve the specific country effect variables such as economic mass variables. For the cereals and alfalfa group, we find that water-related variables influence virtual water imports of cereals, millet, sorghum, corn, barley, and sesame. Therefore, we suggest that a basic gravity model be applied to the other crops. In the vegetable group, we find that related water variables impact virtual water trade for all crops except marrow. Dates are the only fruit crop that are not influenced by the water-related variables.

This dissertation explores how property rights to a natural resource affect economic decisions for investment or sale, and how these decisions may in turn impact other areas of the economy. The first essay focuses on how incomplete land ownership on Indian Reservations in the United States affects landowner incentives to engage in agricultural production. The second essay explores how the transfer of water in arid regions via water right sales affects local labor markets and environmental outcomes. The third essay seeks to understand how shale-gas drilling has affected organic food production. This dissertation provides several policy implications. First, the findings suggest that the key to improving lagging agricultural development on American Indian land is to improve tribal farmers’ access to capital, so they can invest in agricultural systems (including irrigation) at the level of their neighbors enjoying fee-simple title. Second, while a potentially effective solution to reduce costly water shortfalls among high-value urban users, water sales from agricultural to urban users appear to simultaneously decrease employment and environmental quality in the water exporting region. Third, Drilling activities appear to discourage organic farming in Colorado. While farmers with mineral ownership benefit, identifying the direct causes of lost organic certification can inform policy that regulates negative externalities on organic farms caused by drilling.

Canadian agriculture trade with the United States, specifically trade in livestock and livestock commodities, has flourished under the NAFTA regime. However, the benefits of this trade liberalization have hidden environmental costs that seldom get noticed or accounted. The purpose of this research was to evaluate the hidden cost on water resources by first assessing the virtual water content (VWC) of various types of livestock and livestock products and then quantifying the virtual water flow (VWF) related to trade in livestock and its products between Canada and United States. The study also examined the North American Free Trade Agreement (NAFTA) and evaluated its implications for Canadian water resources. The research was conducted in three parts. First, the background literature on NAFTA was studied and trade data were collected to understand the NAFTA regime and study the impacts on Canadian exports of livestock and livestock products from the 1990s. The trade data were collected from provincial agricultural ministries and Statistics Canada. Secondly, datasheets were created to calculate the VWC in the various categories of animals and ultimately to estimate VWF between the two countries. Finally, Alberta and Ontario were chosen as case study areas to investigate localized impacts on water resources due to trade under NAFTA. The research results indicate that there is a large difference in the amount of VW being transferred through livestock and livestock commodities from Canada to the U.S. The average difference in trade has been calculated to be 3.6 billion m3 per year. This makes Canada a net exporter of virtual water to the U.S. A closer look at the trade patterns reveals that the U.S. imports mostly water-intensive commodities like cattle and cattle commodities, while it exports mostly less-water intensive commodities like chicken and mutton. By eliminating numerous trade barriers, the agreement has allowed competitive market forces to play a more dominant role in determining agricultural trade flows between the two countries. NAFTA has been criticized and contested at different levels for encouraging bulk water export from Canada to the U.S. What has not received attention in this debate is that water is also being exported in other forms, i.e., the virtual form. The hidden environmental, costs (for the exporting countries) or benefits (to the importing countries) are not reflected in the pricing of agricultural commodities. NAFTA’s mandate for the expansion of trade and investment through the removal of all trade barriers between the two countries is encouraging increased VW trade. This trade, if overlooked, can have deleterious impacts on the water resources of Canada.

Canadian agriculture trade with the United States, specifically trade in livestock and livestock commodities, has flourished under the NAFTA regime. However, the benefits of this trade liberalization have hidden environmental costs that seldom get noticed or accounted. The purpose of this research was to evaluate the hidden cost on water resources by first assessing the virtual water content (VWC) of various types of livestock and livestock products and then quantifying the virtual water flow (VWF) related to trade in livestock and its products between Canada and United States. The study also examined the North American Free Trade Agreement (NAFTA) and evaluated its implications for Canadian water resources. The research was conducted in three parts. First, the background literature on NAFTA was studied and trade data were collected to understand the NAFTA regime and study the impacts on Canadian exports of livestock and livestock products from the 1990s. The trade data were collected from provincial agricultural ministries and Statistics Canada. Secondly, datasheets were created to calculate the VWC in the various categories of animals and ultimately to estimate VWF between the two countries. Finally, Alberta and Ontario were chosen as case study areas to investigate localized impacts on water resources due to trade under NAFTA. The research results indicate that there is a large difference in the amount of VW being transferred through livestock and livestock commodities from Canada to the U.S. The average difference in trade has been calculated to be 3.6 billion m3 per year. This makes Canada a net exporter of virtual water to the U.S. A closer look at the trade patterns reveals that the U.S. imports mostly water-intensive commodities like cattle and cattle commodities, while it exports mostly less-water intensive commodities like chicken and mutton. By eliminating numerous trade barriers, the agreement has allowed competitive market forces to play a more dominant role in determining agricultural trade flows between the two countries. NAFTA has been criticized and contested at different levels for encouraging bulk water export from Canada to the U.S. What has not received attention in this debate is that water is also being exported in other forms, i.e., the virtual form. The hidden environmental, costs (for the exporting countries) or benefits (to the importing countries) are not reflected in the pricing of agricultural commodities. NAFTA’s mandate for the expansion of trade and investment through the removal of all trade barriers between the two countries is encouraging increased VW trade. This trade, if overlooked, can have deleterious impacts on the water resources of Canada.

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The Lower Athabasca Water Management Framework limits water extractions by the oil sands industry near Fort McMurray, Alberta. To increase water-use efficiency and minimise the cost of water restrictions, several policy and technology options were developed and assessed using quantitative and qualitative methods. Selected options were the policies of water trade and pricing with refund, and the technologies of storage, and consolidated tailings and increased recycling. Options were designed based on year 2020 demand and assessed relative to prior allocation. Using linear programming and static optimisation, it is shown that an off-stream storage sized to avoid water restrictions, in combination with efficient water allocation (e.g. water trade), is most cost-effective, although provides no ongoing incentive to increase water-use efficiency. Only the policy options provide equal incentives across firms to increase efficiency. To achieve both objectives of increased water-use efficiency and minimised costs, a combined policy and technology approach is recommended. / Agricultural and Resource Economics