Chapter17

Chapter17 - Chapter #17: Irrigation Economics Contents:...

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1 Chapter #17: Irrigation Economics Contents: General Overview An Example of Technology Choice Under Markets Some Stylized Facts About Irrigation Queuing Vs. Markets: A Numerical Example Government Appropriates Water Rights General Overview The economics of irrigation is an important part of water economics in the U.S., because irrigation accounts for the majority of agricultural water use and agriculture uses 80% of annual water supply. The analysis of irrigation water demand requires a basic knowledge of the hydrologic cycle as it affects agricultural production. Figure 17.1: The Hydrologic Cycle Agricultural Production Rain Evaporation Irrigation Run-on Run-off Deep Percolation to Groundwater The use of irrigation water depends on: • Economics (prices and costs) • Crop Selection • Land Quality and Environmental Conditions • Irrigation Technology Water Management Choices depend on: • Type of Crops • Irrigation Technology • Level of Water Availability
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2 Some Stylized Facts About Irrigation Irrigation water is measured in "acre-feet," AF , which is the amount of water needed to cover one acre of land to a one foot depth (before water is lost to percolation). Irrigation Efficiency measures the percentage of water that is actually consumed by the crop. Typical Water Use of Common Crops : Heavy water users: Alfalfa: 5-7 AF/year Rice Medium water users: Fruits: 2.5-4 AF/year Cotton: 2.5-4 AF/year Vegetables: 2-3.5 AF/year Low water users: Wheat: 1.8-2.5 AF/year Notice that there are large water savings moving from Rice or Alfalfa to Wheat. Irrigation efficiencies of several irrigation technologies Gravitational: Furrow .65 Border .65 Sprinkler: Manual move .8 Center pivot .8 With field crops Low volume: Drip .95 Not used with alfalfa, wheat LEPA .9 Used in field crops Mini-sprinkler .9 Used with trees Water Saving Technology is initially very expensive to install. Over the lifetime of the system, the farmer gains from the technology through higher irrigation efficiency which defrays some of the cost of water. However, the correct incentives may not exist to stimulate investment in water-saving technology, since water is not sold in markets (price does not necessarily reflect MB).
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3 Currently, the price of water is set administratively and is not the result of the maximizing behavior of economic agents. Water in agricultural uses is also heavily subsidized, which has the following implications: • Low water prices benefit users by providing a cheap source of water • Low water prices creates an inefficient incentive to adopt new, water-saving technologies. How The Choice of Irrigation Technology Affects Output Water is applied to the surface, percolates through the soil, and is taken up by the root system. • If the soil is dry and a bucket of water is poured on it, most of it will fail to permeate the soil, but will instead exit the land in the form of runoff.
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Chapter17 - Chapter #17: Irrigation Economics Contents:...

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