The color of water: The contributions of green and blue water to agricultural productivity in the Western Brazilian Amazon

Deforestation and global climate change are predicted to affect precipitation and agricultural productivity in the Amazon. Anecdotal evidence suggests that farmers are already being affected by changes in the timing and amount of precipitation, but there is little quantitative evidence on the mechanism by which precipitation affects production. This paper uses an innovative application of remote sensing and meteorological data to separate rainfall into green water (soil moisture that contributes to plant water use) and blue water (surface water), to estimate the impact of these water sources on the production and production efficiency of dairy in a mature colonization zone of the Brazilian Amazon. This approach allows us to draw inferences about different pathways through the precipitation-production causal chain and to link changes in precipitation with impacts on farm profits and welfare. We find that production and production efficiency are affected by green and blue water and that reductions in rainfall will have negative impacts that may disproportionally impact the poor. Our methods and results are informative to economists interested in this relatively new application of remote sensing data, to geographers interested in identifying the role of green and blue water in agricultural production, and more generally to researchers interested in the impacts of rainfall and water availability on small-scale producers in the Brazilian Amazon.