Economic Analysis of Alternative Irrigation Technologies: Texas Lower Rio Grande Valley
MetadataShow full item record
The focus of this study is the economic feasibility of drip irrigation adoption using capital budgeting and quadratic programming techniques. The capital budgeting techniques used in the study are net present value (NPV) and returns above specified costs (RASC). Modified crop enterprise budgets incorporating drip irrigation are developed based on data from Texas AgriLife Extension Service crop enterprise budgets and published literature focusing on costs and returns of drip irrigation. The quadratic programming technique considers risk and incorporates the modified crop enterprise budgets to estimate a cropping pattern that maximizes the net income above specified costs for the region. The RASC per acre for drip-irrigated crops ranged from $56.34 to $1,909.03, while the RASC per acre for flood-irrigated crops ranged from $142.51 to $1,488.12. Flood-irrigated onions, cotton, and sugarcane had higher RASCs per acre, while the RASCs were greater for drip-irrigated grapefruit and oranges. Evaluating the NPV of the crops resulted in similar results; only grapefruit and oranges were economically-feasible drip-irrigated crops. The baseline results identified levels of drip irrigation adoption ranging from 52,000 acres to 64,497 acres as levels of risk were varied. The level of water available at the reservoir suggested minimal impacts on the level of drip-irrigation adoption, but serious implications for the agriculture economy. Several sensitivity scenarios concentrated on the implications of yield response and water savings that result from the adoption of drip irrigation. The greatest amounts of drip-irrigated crops were present when the yield responses were 130% of the flood-irrigated crops with a 20% water savings. As the amount of water available was reduced, the amount of drip-irrigated crops ranged from 46,111 acres to 59,724 acres. Drip irrigation appears to be an economically-viable alternative in the LRGV due to the presence of drip-irrigated crops in the entire myriad of scenarios investigated in this research. If producers are only concerned with the bottom line as provided by the RASC analysis and no other variables such as water availability, risk, and crop rotations affecting the decision making process, only drip-irrigated grapefruit and oranges are economically competitive with conventional irrigation systems.
Wilbourn, Brant 1987- (2012). Economic Analysis of Alternative Irrigation Technologies: Texas Lower Rio Grande Valley. Master's thesis, Texas A&M University. Available electronically from