posted on 24 September 2015
Written by Sig Silber
Irrigation is the world's largest water user in dry regions. Irrigation is an important contributor to food security and for maintaining livelihoods in many of the world's rural arid places. Moreover, with growing evidence of climate variability and change, policy choices affecting irrigation will be deliberated with great care in the search for flexible measures for adapting to drought and climate while sustainably protecting food security.
Frank Ward, other researchers at New Mexico State University (NMSU), colleagues, and former students internationally provide some of the most detailed and peer reviewed research of policy analysis of water and food security. Frank has posted some of his recent findings on his NMSU web page.
Much of their work deals with three important policy challenges connecting climate, drought, food security, farm income viability, water use, and irrigation:
The paper I am reviewing addresses the first two of these policy challenges.
When dealing with irrigation it is hard but important to separate myths from reality. Here are a small number of commonly-believed myths and their contrasting realities.
1. Water saved by one farmer saves water for the system. In many cases the individual saving reduces use by somebody else, which can create water administration problems. This problem is discussed in both papers below.
2. Less water applied means less water consumed by the crop. Water use, or evapotranspiration, is the difference between what is applied and what is returned to the system in a different location or time. Reports which focus only on the amount of water applied do not tell you how much is being used by the crop. So it's hard to make inferences on effective conservation programs from such reports.
3. "Water consumed by crops is wasted". Plants use water as part of its stages of growth. They exchange water for carbon dioxide which is part of the photosynthesis process in which plants release water to the atmosphere in each of its stages of growth. Technologies and management practices that allow a crop to consume more water as part of its photosynthesis by trading water for carbon dioxide often result in higher crop yields per acre. This can be economically attractive to farmers if the increase in yield requires a smaller added cost than the added revenue produced by the higher yield.
1. Farmers typically make good business decisions, are quick on their feet, and are always on the lookout for ways to put their land and water to higher valued uses when those uses become available. Talk to a farmer for a few minutes and you'll find out that it's true. Farmers face a large number of complicated interrelated decisions that make it one of the more difficult businesses to survive, a difficulty compounded in periods of drought and where water administration is poorly organized. The economic value of water measured as profitability in irrigation guides most of the decisions irrigators make.
2. In the USA and in many other nations, farmers receive excellent technical and information support to improve their profitability. There are always factors that slow the adoption of new technology and approaches but generally farmers are quick adopters of new technology and approaches when it promotes profitability. A more complex question is the alignment between farm profit and overall public welfare but that is beyond the scope of this article.
3. Subsidies can have many impacts. So when subsidies are being debated, it's important to have a reason for why a subsidy is desirable either for the public good or why a subsidy produce some other gain for society. To be justified, a subsidy needs to be more than simply a redistribution of income from taxpayers to a favored group of recipients.
To get started, take a look at the Abstract from a 2008 article written by Frank Ward and Manuel Pulido Velazquez from the Technical University of Valencia, Spain.
Water conservation in irrigation can increase water use (Frank A. Ward and Manuel Pulido-Velazquez, Proceedings of the National Academy of Sciences of the United States of America)
The full downloadable article can be found here. The main message is in the abstract.
There is a more recent article from 2014 which I now review below:
Economic impacts on irrigated agriculture of water conservation programs in drought (Frank A. Ward, Journal of Hydrology, Science Direct).
The full article may not be available to those who do not have the right subscriptions or do not want to pay the small fee but if you write the author he can legally provide you with a personal use copy. A major objective of this paper is to quantify the benefits of providing alternative levels of subsidies to encourage the adoption of drip irrigation. It looks at what set of conditions makes drip irrigation more or less effective than flood irrigation. But there is much more covered in this article. So I am only quoting a small section to illustrate the complexity of the issues:
Quoting from the article:
"These economic and hydrologic challenges raise the importance of protecting against the increased water depletions that a growing drip irrigation subsidy could otherwise promote. Protecting the stream-aquifer system and the basin's water rights holders against increased depletions can be achieved by on-farm actions that reduce land in production, such as simple regulations or public purchases of water or water rights for urban or environmental purposes. Without water administrators taking active steps to reduce irrigated land in production in the face of greater public subsidies of drip irrigation, total depletions could rise as growers convert to drip irrigation from surface irrigation thanks to higher greater crop yields and associated higher ET [evapotranspiration].
Irrigators may interpret their water right as the right to apply up to a base amount of water on their land rather than the right to deplete no more than a base depletion level. Depletion is harder to measure than application. Where this view of a potentially unused water right occurs, farmers can be expected to adjust their crop mix and bring in additional irrigated acreage to fully use their base right to apply to respond to a subsidy for converting from surface to drip irrigation. Because of the reduced water applications associated with farmers who substitute infrastructure that increases irrigation efficiency, protecting a river system from being over-appropriated may require water administrators to take concrete steps to cap depletions.
However, protecting existing water rights holders against these new depletions poses special challenges. One way to deal with this challenge is to measure ET in some acceptable way, posted by the water rights administrative authority in a public place. Such a public posting could contribute to a more open and transparent understanding and distinction of water application versus water depletion. This understanding could encourage a better-informed and more professionally-implemented water administration. Growers who doubted the accuracy of the consumptive water right based on the posted ET would have the right to prove the error by their own measurements.
In May 2011, the US Supreme Court ruled on a case in which downstream water users in the state of Montana discovered that increased upstream use of center pivot irrigation in Wyoming where surface irrigation had previously occurred in the Yellowstone River system. The problem arose in the later part of the 20th century when center pivot irrigators continued to divert their historical diversions from the river, but returned less to the system because the center pivot irrigation systems raised irrigation efficiencies. The court ruled against Montana, stating that the wording of the 1950 Yellowstone River Compact did not prohibit upstream irrigators in Wyoming from adopting new irrigation technologies, even if resulted in less water being returned to the river system. For the future, the distinction between diversions and depletions is likely to receive growing scrutiny as new water-sharing agreements are drafted or old ones are re-negotiated. This distinction is likely to receive more attention in river basins where water sharing systems do not currently exist."
This table from the article illustrates the depth of data available for the area being studied and the kinds of results you get when you are able to process this amount of data. Because NMSU is located in the Mesilla Valley, New Mexico, they do periodic surveys of the farmers and thus have more detailed information than many researchers.
The table packs in lots of information. To make things a bit more interesting, I asked Frank Ward to run the model with the budgeted 2014 product prices. Table 1 reflects the farmer's 2012 allocation of land to crops. The subsequent Tables in the paper (not shown here) describe how farmers allocate water to maximize income under two drip irrigation policies and for several drought scenarios. This scenario exercise shows the flexibility and power of the methodology to assess alternative scenarios. In the full paper, it shows how farmers will best adjust their acreage and water allocation to the prices that they face. It is important to keep in mind that not all land is equally suitable for all crops and the model takes that into account.
In general, the table is self-explanatory. The analysis looks at four combinations of two variables (irrigation technology and source of the water) for each of the seven crops:
Notice the second column from the right labeled marginal yield, the additional yield per each added acre entering production. This is a key part of the optimization presented in the article. As stated by Dr. Ward in a private communication during the writing of this review article:
This PMP methodology was developed by Richard E. Howitt and more information on it can be found here.
I have created my own table using the data from the above Ward table and calculated the average contribution to income of an acre-foot of water depleted in order to provide additional insight. I took the average of the four combinations of irrigation technology and water sources to keep the table simple. The average contribution to income is different than the shadow price which is the contribution of the next acre-foot of water depleted or not depleted. One addresses the average impact on income; the other the marginal impact on income. The marginal impact is of most interest to the farmer in terms of reallocating land and water based on changing product prices, technology or other variables. The average impact of changing product prices on a year-to-year basis shows the impact of changing product prices. Not all land is equally suited for all crops in the Mesilla Valley and in many other agricultural areas and price projections are not certainty so this agricultural district always has a mix of crops. The land and water allocation to each crop changes as farmers attempt to maximize their income without increasing risk.
So for that particular year's crop allocation (2012) but updating to what prices were forecast to be in 2014, lettuce, onions, and chile especially green chile would be the most efficient use of water prior to reallocation in terms of farm profitability per acre foot of water consumed/depleted and pecans would be the least profitable use of water. That does not mean that the return on capital invested followed the results of the above calculation since these are income estimates not return on capital employed. But it shows that when you do calculations, you may be surprised by the results. That is the reason to do the calculations. The last time I looked at these calculations several years ago the crops which were best and worst at converting water depletion into income were almost the reverse of the situation in 2014 pointing out both the risk that farmers take and the value of crop price forecasting to the extent it is practical.
Value of Water.
As part of the analysis done by PMP you end up with an overall assessment of the value of water. This is an unusual way of presenting this information but it is tailored to the particular project and the policy issues being considered.
The above table which was again run with 2012 crop allocations and 2014 crop prices addresses the question of the value of surface and groundwater based on the ability of the Rio Grande Project providing what is called a "normal" delivery. Thus this analysis may not apply to all projects as it is dealing with a very special situation but one that might occur when a water supply is regulated and there is storage in the system. There are six cases shown in the pairs of rows ranging from zero percent of "normal" delivery to 100 percent of normal delivery. There are two scenarios one where there is no subsidy of conversions to drip irrigation and one where a policy would subsidize 100 percent of the conversion costs to drip.
The two right-hand columns might be easier to interpret as being the economic penalty of having one less acre foot of water available for depletion which is the same as the economic value of one more acre foot of water. One can see that with 100% of normal surface delivery and using flood irrigation, there is a very small value to pumping groundwater since every available acre is receiving a full supply of water. With drip irrigation, the amount of land utilized decreases due to the higher yields and higher crop water consumption while water administrators need to guard against increased depletions with the subsidy.
At the other extreme, with no surface water available, there is a need to go to an all groundwater approach. The $800 plus acre-foot value of additional surface depletions represents either the penalty for not having the surface water or the benefit of having that water and it is high because it includes the loss of value of trees which would die or at least be impaired if not watered. That is why the numbers go up rapidly as you approach the lower delivery levels as trees would be the last crop not to be irrigated since it takes many years for a newly planted pecan tree to become fully productive. Thus the economic value of water per acre foot during a drought or other supply interruption represents not only the current year impact but the impact on future income if trees (and other multiple year crops) are not preserved.
This latest Ward article on irrigation economics is tough reading but I find that the papers that Frank Ward and his associates write are always very informative and deal with the actual issues rather than promote favorite positions. They are difficult reading precisely because they are based on data and provide numbers that are useful in evaluating policy options. That does not excuse the reader from the duty to assess if a particular set of policy options has been properly formulated such that the model provides useful data for analysis.
I hope I have made the point that good water policy depends on careful analysis of data and a willingness to let the analysis inform policy decisions. I also hope that I have sufficiently enticed you to read both papers.
>>>>> Scroll down to view and make comments <<<<<<
This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved