Economic Issues in Irrigation

Overview:

Economic issues in irrigation reflect complex and highly dynamic factors. Energy costs, commodity markets, weather patterns and other issues are difficult to predict and impossible to control. Irrigation is as much a risk management tool as an expensive input. Equipment selection, irrigation management, and other decisions need to be made with economics in mind.

Objectives:

1. Increase understanding of factors that affect economics of irrigation systems.
2. Increase understanding of costs and associated benefits of commonly used irrigation systems.
3. Increase understanding of methods for evaluating and comparing irrigation systems.

Key Points:

1. When considering investing in an irrigation system, several major factors should be noted: the availability of water; the system’s application efficiency; the depth from which the water must be pumped, or pumping lifts; the operating pressure of the design; financing; savings in field operations; energy sources; energy prices; crop mix; economies of scale; labor availability; and commodity prices.
2. Overlaying these factors are the differences in the cost and water application efficiencies of the various irrigation systems.
3. Compared to furrow irrigation, center pivots offer more than enough benefits in application efficiency and reduction in field operations to offset the additional costs. Among the three center pivot alternatives, LEPA center pivot generates the highest benefits at low, intermediate and high water requirement scenarios.
4. The less efficient the irrigation system, the more effect that fuel price, pumping lift and wage rate have on the cost of producing an irrigated crop. Therefore, when there is inflation or volatility of these cost factors, it is more feasible to adopt more efficient irrigation systems and technology.

Assess your knowledge:

1. How do application efficiency and operating pressure vary among different irrigation systems?
2. Explain how to estimate annual operating expenses for an irrigation system.
3. How do fuel prices, pumping life, inches of water pumped and labor wage rate affect the pumping cost?

Economics of Irrigation Systems

Investing in a new irrigation system is expensive and complex, with many factors needing to be evaluated, including water availability, pumping lift, labor cost, fuel cost, tax rate, soil type, field topography, etc. Overlaying these factors are the differences in the cost and water application efficiencies of the various irrigation systems. These factors make it difficult to make a wise investment decision.

To help farmers weigh these factors and make these decisions, researchers studied the costs and associated benefits of six commonly used irrigation systems in Texas: conventional furrow, surge flow, mid-elevation spray application center pivot, low elevation spray application center pivot, low energy precision application center pivot, and subsurface drip. The study found that:

• Furrow irrigation requires less capital investment but has lower water application efficiency and is more labor intensive than the other irrigation systems.
• Adding surge flow valves increases water application efficiency enough to increase returns per acre. However, before purchasing surge equipment, growers should closely evaluate the ability to provide the required constant management of irrigation scheduling with surge flow systems.
• Compared to furrow irrigation, center pivots offer more than enough benefits in application efficiency and reduction in field operations to offset the additional costs.
• Where it is feasible to use, half-mile center pivot offers substantial savings compared to quarter-mile.
• Among the three center pivot alternatives, low energy precision application (LEPA) center pivot generates the highest benefits at low, intermediate and high water requirement scenarios.
• Advanced irrigation technologies are best suited to crops with high water needs, particularly in areas with deep pumping lifts. Producers using advanced systems will have not only lower pumping costs, but also potential savings from chemigation and the need for fewer field operations.
• Compared to LEPA center pivot, subsurface drip irrigation (SDI) generally is not economically feasible for any crop water-use scenario because of its relatively high investment and small gain in application efficiency. SDI shows greater potential in situations less suited to center pivot irrigation; these may include low water capacities, small or irregularly shaped fields, etc.
• Producers should closely evaluate using SDI systems for high-value crops. Research suggests that SDI systems may improve the application efficiency and the timing of frequent applications. These improvements may increase acreage and yields enough to justify the additional investment costs of subsurface drip systems.

Economics of Irrigation Pumping Costs

Researchers also studied the effect on pumping cost of variations in fuel prices, pumping lift, amount of water pumped and labor wage rate. Results indicated that:

• The less efficient the irrigation system, the more effect that fuel price, pumping lift and wage rate have on the cost of producing an irrigated crop. Therefore, when there is inflation or volatility of these cost factors, it is more feasible to adopt more efficient irrigation systems and technology.
• As more water is pumped, the fixed cost per acre-inch drops.

References

• Economics of Irrigation Systems (B-6113)
• Calculating Horsepower Requirements and Sizing Irrigation Pipelines (B-6011)