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Abstract

This paper provides the first estimates of the effects of climate change on agriculture while explicitly modeling tile drainage. We show in a simple conceptual model that the value of precipitation should differ between drained and non-drained land, implying that pooling these lands could bias estimates of the effects of climate change on land values. We test this hypothesis by estimating a Structural Ricardian model for U.S. counties east of the 100th meridian. Consistent with our theoretical model, our estimates show that the value of precipitation is higher on non-drained lands.

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