Economic viability of deficit irrigation in the western US

Authors: MANNING, DALE - Colorado State University; LURBE, SALVADOR - Colorad0 State University; Comas, Louise; Trout, Thomas; Flynn, Nora; FONTE, STEVEN - Colorado State University

Submitted to: Agricultural Water Management
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 9/27/2017
Publication Date: 8/20/2017
Citation: Manning, D.T., Lurbe, S., Comas, L.H., Trout, T.J., Flynn, N.E., Fonte, S.J. 2017. Economic viability of deficit irrigation in the western US. Agricultural Water Management. 196/114-123. https://doi.org/10.1016/j.agwat.2017.10.024.
DOI: https://doi.org/10.1016/j.agwat.2017.10.024

Interpretive Summary: In many arid regions of the world, population growth, groundwater depletion, and uncertain supplies have caused agricultural water to become increasingly scarce. Deficit irrigation, applying less than full irrigation, provides a potential response to water scarcity but no consensus exists on its economic viability. In this paper, we develop an agro-economic model that connects crop stress at different times during the growing season with farm profitability. We use the model to determine the economic conditions under which crop stress levels are optimal for maize farmers in Northern Colorado. With current irrigation costs, producers optimally aim for full irrigation through the growing season. As grain prices increase beyond $0.19 per kilo, deficit irrigation can become optimal during the late vegetative growth stage but this requires a water cost of U.S. $0.207 per cubic meter or about 11 times current typical water delivery costs, or 2.2 times current lease prices. Currently, if producers lack water to fully irrigate a maize crop, the optimal response for a risk averse producer is to decrease the number of hectares planted. These results suggest that producers could respond to water scarcity with deficit irrigation, but only in a range of water costs that depends on output price and production costs. Keywords: Deficit irrigation; crop-water production function; agro-economic model; economic viability

Technical Abstract: In many arid regions of the world, population growth, groundwater depletion, and uncertain supplies have caused agricultural water to become increasingly scarce. Deficit irrigation (DI) provides a potential response to water scarcity, but no consensus exists on its economic viability. In this paper, we develop an agro-economic model that connects plant growth-stage-specific evapotranspiration (ET) targets with farm profitability. We use the model to determine the economic conditions under which ET targets of less than 100% are optimal for maize farmers in Northern Colorado. With current irrigation costs, producers optimally set ET targets across the growing season to 100%. As grain prices increase beyond $0.19 per kilo, DI can become optimal during the late vegetative growth stage but this requires a water cost of U.S. $0.207 per cubic meter or about 11 times current typical water delivery costs or 2.2 times current lease prices. If short of water to fully irrigate a maize crop, the optimal response for a risk averse producer is to decrease the number of hectares planted. These results suggest that producers could respond to water scarcity with deficit irrigation, but only in a range of water costs that depends on output price and production costs. Keywords: Deficit irrigation; crop-water production function; agro-economic model; economic viability