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A risk-based hydro-economic analysis for land and water management in water deficit and salinity affected farming regions

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  • Kim, Daeha
  • Kaluarachchi, Jagath J.

Abstract

For on-farm decision-making in salinity affected water deficit regions, a hydro-economic analysis helps developing consistent resource management plans considering biophysical and economic constraints. However, variability of crop prices and yields is a practical difficulty when valuating resources. In this study, we proposed a novel hybrid framework that considers variable crop prices and yields to develop resource allocation strategies using a risk-based economic model. The FAO AquaCrop model and a linear regression model were used for yield simulation and price estimation, respectively. The predicted variability of crop prices and yields from these models are incorporated into the risk-based economic model. The hydro-economic analysis was conducted for making producers' pre-season decisions on land and water allocations in salinity-affected agricultural lands in south central Utah. The results showed alfalfa-dominant land and water allocation strategies are suitable options due to the high price and low production costs of alfalfa under high surface water availability. With limited surface water availability, the results opted to rent water rights to soils with high maize productivity for higher profits. The risk aversion behavior led to land and water allocation strategies with less variable profits. It was also found that the salinity stress severely degraded water productivity. The proposed approach provide a framework to manage resources for agricultural production in salnity affected and water deficits regions under variable price and climatic conditions.

Suggested Citation

  • Kim, Daeha & Kaluarachchi, Jagath J., 2016. "A risk-based hydro-economic analysis for land and water management in water deficit and salinity affected farming regions," Agricultural Water Management, Elsevier, vol. 166(C), pages 111-122.
    • Handle: RePEc:eee:agiwat:v:166:y:2016:i:c:p:111-122
    DOI: 10.1016/j.agwat.2015.12.019
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    Cited by:

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    2. Foster, T. & Brozović, N., 2018. "Simulating Crop-Water Production Functions Using Crop Growth Models to Support Water Policy Assessments," Ecological Economics, Elsevier, vol. 152(C), pages 9-21.
    3. Eamen, Leila & Brouwer, Roy & Razavi, Saman, 2020. "The economic impacts of water supply restrictions due to climate and policy change: A transboundary river basin supply-side input-output analysis," Ecological Economics, Elsevier, vol. 172(C).
    4. Alireza Nouri & Bahram Saghafian & Majid Delavar & Mohammad Reza Bazargan-Lari, 2019. "Agent-Based Modeling for Evaluation of Crop Pattern and Water Management Policies," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 33(11), pages 3707-3720, September.
    5. Hua Xing & Shuhong Mo & Xiaoyan Liang & Ying Li, 2021. "Water Resources Allocation Based on Complex Adaptive System Theory in the Inland River Irrigation District," Sustainability, MDPI, vol. 13(15), pages 1-19, July.
    6. Kim, Daeha & Chun, Jong Ahn & Inthavong, Thavone, 2021. "Managing climate risks in a nutrient-deficient paddy rice field using seasonal climate forecasts and AquaCrop," Agricultural Water Management, Elsevier, vol. 256(C).

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