IDEAS home Printed from https://ideas.repec.org/a/eee/agiwat/v203y2018icp333-343.html
   My bibliography  Save this article

Farm level economic analysis of subsurface drip irrigation in Ontario corn production

Author

Listed:
  • Jacques, David
  • Fox, Glenn
  • White, Peter

Abstract

This paper examines the economic feasibility of a subsurface irrigation system for a representative corn producer in Norfolk County, Ontario, Canada. We use stochastic capital budgeting to generate a distribution of net present values for this investment. Future corn yields and corn prices were treated as distributions. Under our base assumptions, the subsurface drip irrigation system has a negative expected net present value, meaning that it would not be a worthwhile investment for a corn farmer at the present time. The system's ability to increase yields has the largest effect on its expected net present value. Attempts to improve the system's economic value should focus on increasing its effect on yields in years with typical agronomic conditions. With reasonable assumptions for other system parameters, the initial cost of a 40.5 ha system would have to be reduced to $165,000 to have a positive net present value 50% of the time or the system would have to increase corn yields by 33% in years with typical growing conditions to achieve the same net present value outcome.

Suggested Citation

  • Jacques, David & Fox, Glenn & White, Peter, 2018. "Farm level economic analysis of subsurface drip irrigation in Ontario corn production," Agricultural Water Management, Elsevier, vol. 203(C), pages 333-343.
    • Handle: RePEc:eee:agiwat:v:203:y:2018:i:c:p:333-343
    DOI: 10.1016/j.agwat.2018.03.018
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0378377418301756
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.agwat.2018.03.018?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Tor N. Tolhurst & Alan P. Ker, 2015. "On Technological Change in Crop Yields," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 137-158.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yongqiang Zhang & Hao Sun & Maosheng Ge & Hang Zhao & Yifan Hu & Changyue Cui & Zhibin Wu, 2023. "Difference in Energy Input and Output in Agricultural Production under Surface Irrigation and Water-Saving Irrigation: A Case Study of Kiwi Fruit in Shaanxi," Sustainability, MDPI, vol. 15(4), pages 1-18, February.
    2. Jovanovic, N. & Pereira, L.S. & Paredes, P. & Pôças, I. & Cantore, V. & Todorovic, M., 2020. "A review of strategies, methods and technologies to reduce non-beneficial consumptive water use on farms considering the FAO56 methods," Agricultural Water Management, Elsevier, vol. 239(C).
    3. Ghadge, Abhijeet & van der Werf, Sjoerd & Er Kara, Merve & Goswami, Mohit & Kumar, Pankaj & Bourlakis, Michael, 2020. "Modelling the impact of climate change risk on bioethanol supply chains," Technological Forecasting and Social Change, Elsevier, vol. 160(C).
    4. Xu, Qin & Fox, Glenn & McKenney, Dan & Parkin, Gary, 2019. "A theoretical economic model of the demand for irrigation water," Agricultural Water Management, Elsevier, vol. 225(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alexandre Gohin, 2019. "General Equilibrium Modelling of the Insurance Industry: U.S. Crop Insurance," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 4(2), pages 108-145, December.
    2. A Ford Ramsey, 2020. "Probability Distributions of Crop Yields: A Bayesian Spatial Quantile Regression Approach," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(1), pages 220-239, January.
    3. Yong Liu & Alan P. Ker, 2021. "Simultaneous borrowing of information across space and time for pricing insurance contracts: An application to rating crop insurance policies," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 88(1), pages 231-257, March.
    4. Liu, Y. & Ker, A., 2018. "Is There Too Much History in Historical Yield Data," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277293, International Association of Agricultural Economists.
    5. Du, Xiaodong & Dong, Fengxia, 2024. "Climate Change and Dynamics of Crop Yield Distribution," 2024 Annual Meeting, July 28-30, New Orleans, LA 343786, Agricultural and Applied Economics Association.
    6. ODonoghue, Erik & Tulman, Sarah, 2016. "The Demand for Crop Insurance: Elasticity and the Effect of Yield Shocks," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235623, Agricultural and Applied Economics Association.
    7. Fabio G Santeramo, 2019. "I Learn, You Learn, We Gain Experience in Crop Insurance Markets," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 41(2), pages 284-304, June.
    8. A. Ford Ramsey & Barry K. Goodwin, 2019. "Value-at-Risk and Models of Dependence in the U.S. Federal Crop Insurance Program," JRFM, MDPI, vol. 12(2), pages 1-21, April.
    9. Ramirez, Octavio A. & Shonkwiler, J. Scott, 2017. "A Probabilistic Model of Crop Insurance Purchase Decision," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 42(1), pages 1-17, January.
    10. Barry K. Goodwin & Nicholas E. Piggott, 2020. "Has Technology Increased Agricultural Yield Risk? Evidence from the Crop Insurance Biotech Endorsement," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(5), pages 1578-1597, October.
    11. Tolhurst, Tor N. & Ker, Alan P., 2017. "The Fingerprint of Climate on 65 Years of Increasing and Asymmetric Crop Yield Volatility in the Corn Belt," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259189, Agricultural and Applied Economics Association.
    12. Chemeris, Anna & Liu, Yong & Ker, Alan P., 2022. "Insurance subsidies, climate change, and innovation: Implications for crop yield resiliency," Food Policy, Elsevier, vol. 108(C).
    13. Addey, Kwame Asiam & Shaik, Saleem & Nganje, William, 2022. "DEVELOPMENT OF FARM MODEL FOR ND and NGP Prediction of Corn and Soybean Yields in the Presence of Random Shocks," Agribusiness & Applied Economics Report 320066, North Dakota State University, Department of Agribusiness and Applied Economics.
    14. Alex Boakye, 2023. "Estimating agriculture technologies’ impact on maize yield in rural South Africa," SN Business & Economics, Springer, vol. 3(8), pages 1-17, August.
    15. Shen, Zhiwei, 2016. "Adaptive local parametric estimation of crop yields: implication for crop insurance ratemaking," 156th Seminar, October 4, 2016, Wageningen, The Netherlands 249984, European Association of Agricultural Economists.
    16. Zheng Li & Roderick M. Rejesus & Xiaoyong Zheng, 2021. "Nonparametric Estimation and Inference of Production Risk," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(5), pages 1857-1877, October.
    17. Kuangyu Wen, 2023. "A semiparametric spatio‐temporal model of crop yield trend and its implication to insurance rating," Agricultural Economics, International Association of Agricultural Economists, vol. 54(5), pages 662-673, September.
    18. Ker, Alan. P & Tolhurst, Tor & Liu, Yong, 2015. "Rating Area-yield Crop Insurance Contracts Using Bayesian Model Averaging and Mixture Models," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205211, Agricultural and Applied Economics Association.
    19. Paolo Agnolucci & Vincenzo De Lipsis, 2020. "Long-run trend in agricultural yield and climatic factors in Europe," Climatic Change, Springer, vol. 159(3), pages 385-405, April.
    20. Jesse Tack & Keith Coble & Barry Barnett, 2018. "Warming temperatures will likely induce higher premium rates and government outlays for the U.S. crop insurance program," Agricultural Economics, International Association of Agricultural Economists, vol. 49(5), pages 635-647, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:agiwat:v:203:y:2018:i:c:p:333-343. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/agwat .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.