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Economics of Drip Irrigation: MAC Demonstration Project Russell Tronstad 520-621-2425 Dept. of Agricultural and Resource Economics.

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Presentation on theme: "Economics of Drip Irrigation: MAC Demonstration Project Russell Tronstad 520-621-2425 Dept. of Agricultural and Resource Economics."— Presentation transcript:

1 Economics of Drip Irrigation: MAC Demonstration Project Russell Tronstad Dept. of Agricultural and Resource Economics

2 Engineering Efficiency OutputInput Engineering Eff. = Crop Yield Water Applied =

3 Economic Efficiency Value Output Value Input Econ. Eff. = Revenue( yield, quality ) Cost( system, water, fumigation fertilizer, mgmt., leaching, … ) fertilizer, mgmt., leaching, … )=

4 Economic Efficiency Economic = Value Output Value Input Value Input HighestValuedOutput Bundle of Resources Labor Water Machinery Fertilizer Land

5 Water Use Dynamics / Time

6 Flood Irrigation -- Laser Leveled Efficient?

7 Efficiency of SDI vs. Flood?

8 Comparison Values for SDI Ownership / Installation Costs (5 actual, 3 hypothetical configurations) Ownership / Installation Costs (5 actual, 3 hypothetical configurations) Annual Operating Costs Annual Operating Costs Water Use Water Use Yield / Revenue Impacts Yield / Revenue Impacts

9 5 plots / 8 Different Systems BedIrrig.Installation Annualized Cost PlotConfig.Freq.Cost20-yr life10-yr life #180" drip bedhigh $2, $ $ #240" drip bed high $1, $ $ #380" drip bed low $1, $ $ #4Furrowfurrow #540" drip bed low $1, $ $ hypothetical mobile unit & furrow configurations #3M80" drip bed low $1, $ $ #4FFurrow4”/irrig #5M40" drip bed low $1, $ $ Broccoli: 6% discount rate

10 5 plots / 8 Different Systems BedIrrig.Installation Annualized Cost PlotConfig.Freq.Cost20-yr life10-yr life #180" 3-linehigh $2, $ $ #280” 2-line high $1, $ $ #380" 3-line low $1, $ $ #4Furrowfurrow #580" 2-line low $1, $ $ hypothetical mobile unit & furrow configurations #3M80" 3-line low $1, $ $ #4FFurrow4”/irrig #5M80" 2-line low $1, $ $ Watermelons: 6% discount rate

11 Yield Differences BedIrrig.Yield% change PlotConfig.Freq.(ctn./ac)from furrow #180" drip bedhigh9057.5% #240" drip bed high % #380" drip bed low9118.2% #4Furrowfurrow842-- #540" drip bed low % hypothetical mobile unit configuration #3M80" drip bed low % #4FFurrow4”/irrig #5M40" drip bed low8622.4% Broccoli, :

12 Yield Differences BedIrrig. Yields /cwt. % change PlotConfig.Freq.SeededSeedlessfurrow #180" 3-linehigh % #280” 2-line high % #380" 3-line low % #4Furrowfurrow #580" 2-line low % hypothetical mobile unit configuration #3M80" 3-line low % #4FFurrow4”/irrig #5M80" 2-line low % Watermelons, 2003:

13 Water Use & Cost ($36/ac-ft) BedIrrig.Actual Water PlotConfig.Freq. Used (af:$/ac) #180" drip bedhigh1.83: $65.70 #240" drip bed high 1.78: $63.90 #380" drip bed low1.83: $65.70 #4Furrowfurrow1.88: $67.80 #540" drip bed low 1.78: $63.90 hypothetical mobile unit & furrow configurations #3M80" drip bed low 1.83: $65.70 #4Hfurrow4”/irrigation3.33: $120 #5M40" drip bed low 1.78: $63.90 Broccoli, :

14 Water Use & Cost ($36/ac-ft) BedIrrig.Actual Water PlotConfig.Freq. Used (af:$/ac) #180" 3-linehigh2.47: $89.08 #280" 2-line high 2.25: $80.99 #380" 3-line low2.47: $89.08 #4Furrowfurrow2.35: $84.60 #580" 2-line low 2.25: $80.99 hypothetical mobile unit & furrow configurations #3M80" 3-line low 2.47: $89.08 #4FFurrow4”/irrig5.33: $192 #5M80" 2-line low 2.25: $80.99 Watermelons, 2003:

15 Return Difference ($/ac) from Furrow (actual): 20 yr. life of SDI, Broccoli BedIrrig. Price ($/carton) PlotConfig.Freq. $5.00$7.38$10.00 #180" drip bedhigh-$ 6.07$ $ #240" drip bed high $ 58.39$ $ #380" drip bed low$ 17.61$ $ #4Furrowfurrow-- #540" drip bed low -$ $ 41.83$ hypothetical mobile unit & furrow configurations #3M80" drip bed low $ 32.49$ $ #4FFurrow4” / irrig-$ $ $ #5M40" drip bed low -$ $ 26.96$ 25.44

16 Return Difference ($/ac) from Furrow (actual): 10 yr. life of SDI, : Broccoli BedIrrig. Price ($/carton) PlotConfig.Freq. $5.00$7.38$10.00 #180" drip bedhigh-$ $ 44.07$ #240" drip bed high -$ 30.85$ $ #380" drip bed low-$ 77.17$ 87.05$ #4Furrowfurrow-- #540" drip bed low -$ $ $ hypothetical mobile unit & furrow configurations #3M80" drip bed low -$ 42.83$ $ #4FFurrow4” / irrig-$ $ $ #5M40" drip bed low -$ $ $ 39.30

17 Return Difference ($/ac) from Furrow (actual): 20 yr. life of SDI: Watermelons BedIrrig. Price ($/cwt.) PlotConfig.Freq. $5.00$7.78$10.50 #180" 3-linehigh$1,402$ 2,422$3,420 #280" 2-line high $ 981$ 1707$ 2,417 #380" 3-line low $ 834$ 1469$ 2,091 #4Furrowfurrow-- #580" 2-line low $ 294$ 624$ 947 hypothetical mobile unit & furrow configurations #3M80" 3-line low $ 849$ 1484$ 639 #4FFurrow4” / applic-$ 107-$ 107-$ 107 #5M40" 2-line low $ 309$ 639$ 962

18 Return Difference ($/ac) from #4F (same yields): 20 yr. life of SDI: Watermelons BedIrrig. Price ($/cwt.) PlotConfig.Freq. $5.00$7.78$10.50 #180" 3-linehigh-$ 21 -$ 21 -$ 21 #280" 2-line high -$ 2 -$ 2 -$ 2 #380" 3-line low -$ 12 -$ 12 -$ 12 #4Furrowfurrow$ 107 $ 107 $ 107 #580" 2-line low -$ 88 -$ 88 -$ 88 hypothetical mobile unit & furrow configurations #3M80" 3-line low $ 3 $ 3 $ 3 #4FFurrow4” / applic #5M40" 2-line low -$ 73 -$ 73 -$ 73

19 Break-Even Water Cost with Same Yield: #4F (4”/irrig): and 20 yr. drip life for Broccoli BedIrrig.All SDI 1/2 SDI PlotConfig.Freq. Costs on Broc.Costs on Broc #180" drip bedhigh $ $ #240" drip bed high $ $ #380" drip bed low$ $ #4Furrowfurrow #540" drip bed low $ 91.53$ hypothetical mobile unit & furrow configurations #3M80" drip bed low $ 92.14$ #4FFurrow4” / applic---- #5M40" drip bed low $ 81.96$ costs same except water

20 Break-Even Water Cost with Same Yield: 4” per irrigation: and 10 yr. drip life for Broccoli BedIrrig.All SDI 1/2 SDI PlotConfig.Freq. Costs on Broc.Costs on Broc #180" drip bedhigh$ $ #240" drip bed high$ $ #380" drip bed low$ $ #4Furrowfurrow #540" drip bed low $ $ hypothetical mobile unit & furrow configurations #3M80" drip bed low $ $72.35 #4FFurrow4” / irrig---- #5M40" drip bed low $ $ costs same except water

21 Break-Even Water Cost with Same Yields: 4” per irrigation: and 20 yr. drip life for Watermelons BedIrrig.All SDI 1/2 SDI PlotConfig.Freq. Costs on Wat.Costs on Wat. #180" 3-linehigh$ 43.46$ #280”2-line high$ 36.58$ #380" 3-line low$ 40.31$ #4Furrowfurrow #580" 2-line low $ 64.54$ hypothetical mobile unit & furrow configurations #3M80" 3-line low $ 35.10$ #4FFurrow4” / irrig---- #5M80" 2-line low $ 59.71$ costs same except water

22 Break-Even Water Cost with Same Yields: 4” per irrigation: and 10 yr. drip life for Watermelons BedIrrig.All SDI 1/2 SDI PlotConfig.Freq. Costs on Wat.Costs on Wat. #180" 3-linehigh$ 78.41$ #280”2-line high$ 65.55$ #380" 3-line low$ 73.51$ #4Furrowfurrow #580" 2-line low $ 91.88$ hypothetical mobile unit & furrow configurations #3M80" 3-line low $ 61.48$ #4FFurrow4” / irrig---- #5M80" 2-line low $80.73$ costs same except water

23 Value of Output for SDI Quality / Price Enhancements? Quality / Price Enhancements? Yield Increase? Yield Increase? Harvesting / Delivery Schedule? Harvesting / Delivery Schedule? Ground Water Quality? Ground Water Quality?

24 Key Considerations Tough to justify SDI on water savings alone in Central AZ -- two crops/yr. may help? Tough to justify SDI on water savings alone in Central AZ -- two crops/yr. may help? Yield or Price Enhancements -- is it marketable yield?? Yield or Price Enhancements -- is it marketable yield?? Actual vs. Hypothetical water use Actual vs. Hypothetical water use Time Horizon: 20, 10, 5 years? Time Horizon: 20, 10, 5 years?


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