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Financial Evaluation of Irrigation Efficiency Improvement Practices in Row Crop Production in Louisiana

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  • Adusumilli, Naveen
  • Davis, Stacia
  • Fromme, Daniel

Abstract

Addressing irrigation water efficiency continues to emerge as one of the potential solutions to minimize irrigation water use, improve water quality, and enhance soil health. Despite the clear importance of financial information in decision making regarding adoption of irrigation tools, little information is available regarding the profitability outlook of such adoption. Lack of assessment of costs and returns could lead to producers resisting adoption citing profit reductions. Hence, a cost-assessment using the financial information is necessary to evaluate the tools’ economic outlook. By using long-term projections of input prices, crop yield, and crop prices, this paper develops a financial analysis of irrigation using surge valves by calculating annual cash flows and net present value. The analysis is based on demonstration plot results and anecdotal estimates related to water savings and yield improvements in corn and soybeans in northeast Louisiana. The positive estimates for net present value indicates that an investment in irrigation efficiency improvement is an economically sound choice. These estimates can enhance the adoption of irrigation efficiency improvement practices by providing an initial understanding of the overall profitability independent of short-term management decisions.

Suggested Citation

  • Adusumilli, Naveen & Davis, Stacia & Fromme, Daniel, 2016. "Financial Evaluation of Irrigation Efficiency Improvement Practices in Row Crop Production in Louisiana," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229791, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saea16:229791
    DOI: 10.22004/ag.econ.229791
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    References listed on IDEAS

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    1. Schaible, Glenn D. & Aillery, Marcel P., 2012. "Water Conservation in Irrigated Agriculture: Trends and Challenges in the Face of Emerging Demands," Economic Information Bulletin 134692, United States Department of Agriculture, Economic Research Service.
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    Cited by:

    1. Zhen Cai & Ranjith P. Udawatta & Clark J. Gantzer & Shibu Jose & Larry Godsey & Lauren Cartwright, 2019. "Economic Impacts of Cover Crops for a Missouri Wheat–Corn–Soybean Rotation," Agriculture, MDPI, vol. 9(4), pages 1-13, April.

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    Keywords

    Production Economics; Resource /Energy Economics and Policy;

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