Dynamic Adjustment of Irrigation Technology/Water Management in Western U.S. Agriculture: Toward a Sustainable Future

"Changing water demands induced through climate change and a growing biofuel energy sector throughout the western States are expected to increase pressures on the present allocation mechanisms for an increasingly scarce resource, raising uncertainty about the sustainability of irrigated agriculture in the West. In this paper, we first present the policy motivation for examining continued producer adoption of water conserving irrigation production systems as a foundation for providing a sustainable future for western irrigated agriculture. Second, we summarize the historical transitions that help to define the adjustment path to increased sustainability for the sector. While western irrigated agriculture is on a path toward greater sustainability, evidence suggests that the sustainability goal has not been fully attained. Third, we develop a new conceptual framework for groundwater management that endogenizes both per acre applied water and an acreage-based technology adoption relationship within a normative, dynamic-optimization model for groundwater irrigated agriculture. The framework models producer adoption decisions under uncertainty while accounting for the influence of irrigation technology as a quasi-fixed input, i.e., the influence of asset fixity on producer adoption decisions. In this model, total crop production is based on consumptive use of irrigation water while the cost side is based on total applied water". Copyright (c) 2010 Canadian Agricultural Economics Society.