Lab Seminar: Jiaxin Yin

This week, ARE PhD candidate Jiaxin Yin presented her ongoing work to the Lab. 

Jiaxin investigates how institutional structure shapes groundwater market implementation using evidence from the Oxnard Basin in Ventura County, California, where the first groundwater market under California's SGMA was implemented. Using a farm-year panel of well-level extraction records linked to crop and land-use data, I show that agricultural production units have become increasingly concentrated, and that the internal reallocation of groundwater within these units absorbs some of the marginal gains from formal market participation. A structural counterfactual exercise shows that informal within-coalition reallocation alone captures 25 percent of the total efficiency gain a frictionless, well-level market could deliver, rising to 52 percent once non-coalition wells are also allowed to trade; the remaining gains require existing coalitions themselves to participate in formal exchange. I further show that a directional trading restriction protecting the basin's seawater-intrusion-prone areas, which the informal CombCode system cannot enforce, but a formal market could, would still recover roughly 80 percent of the frictionless market's efficiency gain. The findings suggest that limited groundwater market trading may reflect institutional substitution rather than market failure, with implications for the design and evaluation of environmental markets.