Financial Evaluation of Irrigation Efficiency Improvement Practices in Row Crop Production in Louisiana

Naveen Adusumilli, Stacia Davis and Daniel Fromme

No 229791, 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas from Southern Agricultural Economics Association

Abstract: Addressing irrigation water efficiency continues to emerge as one of the potential solutions to minimize irrigation water use, improve water quality, and enhance soil health. Despite the clear importance of financial information in decision making regarding adoption of irrigation tools, little information is available regarding the profitability outlook of such adoption. Lack of assessment of costs and returns could lead to producers resisting adoption citing profit reductions. Hence, a cost-assessment using the financial information is necessary to evaluate the tools’ economic outlook. By using long-term projections of input prices, crop yield, and crop prices, this paper develops a financial analysis of irrigation using surge valves by calculating annual cash flows and net present value. The analysis is based on demonstration plot results and anecdotal estimates related to water savings and yield improvements in corn and soybeans in northeast Louisiana. The positive estimates for net present value indicates that an investment in irrigation efficiency improvement is an economically sound choice. These estimates can enhance the adoption of irrigation efficiency improvement practices by providing an initial understanding of the overall profitability independent of short-term management decisions.

Keywords: Production Economics; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 10
Date: 2016
New Economics Papers: this item is included in nep-eff and nep-pke
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:saea16:229791

DOI: 10.22004/ag.econ.229791

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