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

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.