UC Davis

Agricultural production grew dramatically since 1950. While this growth improved food security, it also introduced harmful tradeoffs. A few of those tradeoffs are environmental externalities and market power in food and agricultural markets. The sustainability and resilience of the modern food system require that research and policy carefully weigh the consequences associated with productivity growth. This dissertation evaluates the environmental and supply chain tradeoffs of modern agricultural production.

Chapter 1 quantifies costs of nitrate contaminated drinking water, which largely results from agricultural production. Nitrate contamination of drinking water is a widespread environmental concern and threatens human health. The magnitude of the environmental health consequences depend on an individual's ability to avoid exposure. This paper uses an event-study framework to uncover the heterogeneity in avoidance behavior following Safe Drinking Water Act nitrate violations. Using weekly store-level scanner data, I estimate that consumers spend approximately $4.7 million annually on bottled water and soda to avoid nitrate contaminated drinking water. However, consumers in resource-constrained areas exhibit substantially less protective behavior. This leads to 143 additional infant deaths per year relative to areas with less-costly access to safe drinking water. These results underscore substantial costs from nitrate pollution and that these costs are disproportionately distributed to those with less ability to protect themselves.

Chapter 2 calculates the groundwater impacts of drought and extreme heat in California agriculture. Adaptation to climate and weather shocks can be costly for producers, but it also may impose negative externalities on vulnerable populations. We study this in the context of groundwater in California and evaluate the effects of annual fluctuations in weather and surface water supplies on agricultural well construction and access to drinking water. Using the population of geocoded wells, we show that farmers respond to extreme heat and surface water scarcity through new well construction. This mitigating behavior by agricultural users imposes costs: Extreme heat and surface water scarcity also lower local groundwater levels and cause domestic well failures. While groundwater extraction helps producers reduce the damage from environmental shocks, it also harms access to drinking water supplies in marginalized communities.

Chapter 3 evaluates the efficiency and resilience tradeoffs of different supply chain policies. Recent extreme events and the disruptions they caused have made food supply chain resilience a key topic for researchers and policymakers. This paper provides input into these discussions by evaluating the efficiency and resilience properties of the leading policy proposals. We develop a conceptual model of a prototype agricultural supply chain, parameterize the model based on the empirical literature, and conduct simulations to assess the impacts on resilience and economic welfare of four key policy proposals: (i) intensified antitrust enforcement to improve market competition, (ii) subsidization of entry of additional processing capacity, (iii) prevention of price spikes through anti-price-gouging laws, and (iv) diversification of production and processing across multiple regions. Results show that some of the policies have the potential to improve supply-chain resilience, but their impacts depend on the existing market structure, and resilience gains often come at the cost of reduced efficiency.