Irrigation Technology Adoption in the Texas High Plains: A Real Options Approach

Sangtaek Seo, Eduardo Segarra (), Paul Mitchell () and David Leatham ()

No 21427, 2006 Annual meeting, July 23-26, Long Beach, CA from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: Water scarcity has been a significant issue for several decades in the Texas High Plains, with agriculture identified as the main activity contributing to this scarcity. To address this issue, much effort has been devoted to developing and encouraging adoption of sophisticated irrigation systems with high levels of water application efficiency, such as the low energy precision application (LEPA) system, subsurface drip irrigation (SDI), and variable rate irrigation (VRI). In this study, the economic feasibility of these irrigation systems is evaluated in cotton farming in the Texas High Plains using a real options approach. Results find that only the LEPA system is profitable under current conditions. The VRI system is profitable with high cotton prices (above $0.72/lb), while SDI is not profitable under any conditions explored.

Keywords: Resource/Energy; Economics; and; Policy (search for similar items in EconPapers)
Pages: 28
Date: 2006
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea06:21427

DOI: 10.22004/ag.econ.21427

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