Costs of Saving Water in South Texas with Irrigation District Infrastructure Rehabilitation - Using Capital Budgeting with RGIDECON©

Abstract

As a part of the irrigation district plans, economists with Texas AgriLife Research and the Texas AgriLife Extension Service (through the Rio Grande Basin Initiative), developed and applied a spreadsheet model RGIDECON© (Rio Grande Irrigation District Economics) to facilitate unbiased comparisons of real project costs. That is, a Capital Budgeting – Net Present Value (NPV) methodology, combined with calculation of annuity equivalent (AE) values, was developed to incorporate different initial construction costs, annual operation and maintenance costs, quantity of water saved, expected useful life, etc. of the various alternative projects. Using this combined approach allows for calculation of a single, annual $/acre-foot (af) {or $/1,000 gal} life-cycle cost, comprehensive of all relevant financial and economic parameters, thereby facilitating comparisons across and priority ranking among ID projects.