California Water pricing

Paper , Order, or Assignment Requirements

After reading through the case, (which I will upload later in my account)you should put together written answers to the following question:
Which types of farmers (in terms of the types of crops they grow) would face the largest increases in production costs if California moved to a marginal pricing scheme? You should base your answer on the three issues listed below, and for the sake of simplicity, may focus on most- and least-affected crops for each of the three issues.
a. How will the size of the increase in water costs differ for farmers of different crops? (Hint: See Exhibit 5.)
b. How does the share of water used in production differ across crops? (Hint: See Exhibit 6.)
c. How easy is it for farmers of various crop types to substitute away from water towards other inputs to production? (Hint: Exhibit 8 may prove useful towards addressing this issue. For instance, if water must be used in fixed proportion to other inputs, then by how much would you expect farmers in different regions, but producing the same crop, to vary in terms of the intensity of their water usage?)

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