Irrigation Technology Upgrade and Water Savings: Adapting to Weather Variability and Output Price Uncertainty
Wibowo, Rulianda P.
Peterson, Jeffrey M.
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Aquifer depletion and decreasing saturated thickness of the High Plains aquifer has been a concern for the State of Kansas. The State of Kansas has enacted several policies to slow down the decline of the High Plains aquifer. A common policy to improve irrigation efficiency, reduce water use and to reduce groundwater depletion rate is incentivizing adoption of modern irrigation technology through cost-share programs. The State of Kansas implemented cost-share programs in the time period between 1996 and 2005 to promote water conservation by encouraging adoption of more efficient irrigation technology. Whether the modern technology will result in less water use is a matter of dissension (Whittlesey, 2003; Huffaker and Whittlesey, 2003). There is evidence that despite reducing water use per acre, the cost share programs may have prompted a producer to expand irrigated acreage (Pfeiffer and Lin, 2014). Other studies found that under particular conditions, government policy in promoting groundwater preservation may have had unintended consequences (Golden and Peterson, 2006; Huffaker and Whittlesey, 2003). Weather variability and output price uncertainty create risk for farm profitability that affects a producer’s choice of irrigation and crop. The risk-efficient crop choices are made by the producer in relation to weather variability and output price uncertainty. The producer will find the viable economic decision while limited by water availability. This study is expected to identify the conditions under which a producer will upgrade to an efficient irrigation technology with an aim of water conservation or maximizing crop net returns.