Cornhusker Economics: Putting a Dollar Value on Irrigation in the High Plains

Cornhusker Economics: Putting a Dollar Value on Irrigation in the High Plains November 14, 2018

Richard Perrin - Jim Roberts Professor of Agricultural Economics
Lilyan Fulginiti - Frederick Professor of Agricultural Economics
Federico Garcia - Assistant Professor at the University of the Republic, Uruguay

Recent research (Garcia, Fulginiti and Perrin, 2018) has shown that the extra agricultural production from irrigation across the High Plains Aquifer (HPA) was worth about $3.5 billion in 2007, $2 billion of which was produced in Nebraska.

The HPA underlies an area that includes southern South Dakota, southeast Wyoming, eastern Colorado, Nebraska, western Kansas, eastern New Mexico, northwest Oklahoma, and northwest Texas. This region has a semiarid climate that makes crop production highly dependent on irrigation. Given that irrigation has resulted in severe depletion in some areas of the HPA (Scanlon, et al. 2012), it is important for policy purposes to identify the overall value of this resource in agricultural production.

Analysis

The research analyzed crop production and weather information each year from 1960 to 2007 for each of the 205 counties overlying the HPA. The key parameter was the ratio of yields (total biomass per acre) on irrigated land compared to non-irrigated land (the “IR elasticity”). IR elasticity averaged about 50 percent over the whole period but had increased to about 60 percent by 2007.

Estimates of IR elasticity were obtained using a regression technique that related observed county dry matter yields to the share of irrigated county area, the rate of fertilizer and chemical applications, and weather variables. The latter consisted of growing season precipitation and four “degree day” variables measuring the amount of time over the season that the crop was exposed to various temperature ranges: -5 to 7.9° C, 8-14.9° C, 15-32.9° C and 33° C or over (the corresponding Fahrenheit breakpoints are 23°, 46°, 59°, and 91°).

Read More in the Nov. 14, 2018 Cornhusker Economics or in the more technical research report, What Is the Use Value of Irrigation Water from the High Plains Aquifer? in the American Journal of Agricultural Economics.

Multi-state map of counties showing agricultural value of irrigation water per acre ($/ac) in 2007.
Figure 1. The estimated value of irrigation (dollars per acre) by county, 2007. (Source: What Is the Use Value of Irrigation Water from the High Plains Aquifer? in the American Journal of Agricultural Economics.