Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX Curtis Wilde, Jeff Johnson, James Bordovsky Texas Tech University and Texas Agricultural Experiment Station - Lubbock The Effects of Relaxing Subsurface Drip Irrigation (SDI) Design Uniformity Standards on Returns on Investment and Net Present Values of the Irrigation System Beltwide Cotton Conference New Orleans, Louisiana January 9-12, 2007

Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX Background Efficient in-season water application High water use efficiencies High initial cost to install Installation design uniformity standards -Not to exceed Flow Variation of 20% (USDA – NCRS)

Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX Objective Apply NPV and ROI analysis to installation of SDI systems with varying design uniformities Can design uniformity standards be reduced to decrease the initial cost of the SDI system

Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX Methods and Procedures  Study looks at: -Returns on investment (ROI) and Net Present Value (NPV) for:  Two irrigation levels BI Level (80% of the evapotranspiration demand of the crop) BI Level (60% of the 1.0 BI Level)  Three designs with different uniformities - 5.0% Flow Variation % Flow Variation % Flow Variation

Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX P = annual profits IC = initial cost of the system Methods and Procedures IC = initial cost of the system ATCF = after tax cash flows for year i TV = terminal value of the system in year n n = number of years considered in the analysis

Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX Methods and Procedures 7 year simulation analysis Cumulative Distribution Functions (CDFs) show the probability of a NPV occurring Allows the system designs to be ordered based on risk

Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX SDI Designs 1.0FV 5.0 Design layout0.6FV 5.0 Design layout 1.0FV 16.7 & 1.0FV 37.1 Design layout0.6FV 16.7 & 0.6FV 37.1 Design layout

Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX ROI Results for 1.0BI Level

Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX ROI Results for 0.6BI Level

Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX NPV Results for 1.0 BI Level

Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX NPV Results for 0.6BI Level

Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX CDF Results for 1.0BI Level

Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX CDF Results for 0.6BI Level

Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX CDF Results (cont.) Cost share programs (EQIP) increase NPVs

Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX CDF Results for 1.0BI Level w/ EQIP

Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX CDF Results for 1.0BI Level w/ EQIP

Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX Conclusions SDI design uniformity standards could be relaxed under certain conditions to reduce the initial cost of installation When a lower irrigation level is used system uniformity can be decreased without an detriment to NPV At lower irrigation levels ROI and NPV could be greater for lower design uniformities

Texas Tech University College of Agricultural Sciences and Natural Resources Dept. of Agricultural & Applied Economics Texas Agricultural Experiment Station Lubbock, TX The Effects of Relaxing Subsurface Drip Irrigation (SDI) Design Uniformity Standards on Returns on Investment and Net Present Values of the Irrigation System