marco p. maneta, phd - montana...

Farmers’ response to water scarcity, policy, and risk

Marco P. Maneta, PhD

Geosciences DepartmentThe University of Montana, Missoula

[email protected]

January 7, 2013

Integrated hydroeconomic analysisObjectives

How do droughts impact crop mix and water use?

How does agricultural change impact water availability and otherwater uses?

How do farmers respond to water policy?

What water policy maximizes the social and economic benefits ofirrigated agriculture while mitigating the negative impacts on otherwater users

M. Maneta (UM) Resiliency of agricultural systems January 2013 2 / 18

Integrated hydroeconomic model

Optimization variables:- Crop mix and acreage- Hired and family labor used- Water applied- Amounts of seeds used- Amount of fertilizer used- Amount of pesticides used- Capital- Energy/electricity used

Productionfunction

Climate Flows

Production costs

Social constraints:- Available labor

Physical constraints:- Available land

Policy constraints:- Water allocation rules- Environmental flow mandates- Nitrogen export limits - Subsidies on production- Subsidies on acreage- Minimum wages

External price of inputs:- Price of fertilizers

- Price of seeds- Price of hired labor

- Price of energy- Price of water

Market price of crops

Environmental Social Farmer revenues

Trade-off curves showing the best(Pareto-optimal) policies

Risk aversion costs

PrecipitationGW availableSW available

Crop mixEvapotranspirationGWdemandSW demand

Optimization objectives

Agroeconomic model

Hydroclimatic model

Gross revenue


ResultsEffect of access to water: Spatial component


ResultsSimulation of scenarios

How do farmers behave in a drought?:- Baseline scenario: Precipitation and ET in 2004- Drought Scenario: -40% rainfall +20% increase in ET


Impact of droughtsChange in demand from reservoirs


Impact of droughtsGroundwater use (Farmer 4)


Impact of droughtsEconomic effects (water and land use)


Impact of droughtsEconomic effects (profits and labor)


Impact of droughtsPrecipitation shortfalls and farm profits


Test runFarm in Yolo county, CA

Demonstration for a farm in California

610 ac commercial farm

All crops under irrigation

Farmer is not water constrained

Four crops (Alfalfa, wheat, corn, and tomato)

Three inputs (land, water, labor)

Xi ,j =

Alfalfa Wheat Corn Toms

land...

water...

labor. . .

...


ResultsReproduction of baseline observations

120 140 160 180 200 220 240Land (ac.)

0.000

0.005

0.010

0.015

0.020

0.025

0.030

0.035

Pro

babili

ty

Alfalfa

140 150 160 170 180 190 200 210 220Land (ac.)

0.00

0.01

0.02

0.03

0.04

0.05Wheat

70 80 90 100 110 120 130 140Land (ac.)

0.00

0.01

0.02

0.03

0.04

0.05

0.06Corn

50 100 150 200 250 300Land (ac.)

0.000

0.005

0.010

0.015

0.020Tomato

200 400 600 800 1000 1200 1400Water (cf/ac)

0.0000

0.0005

0.0010

0.0015

0.0020

0.0025

0.0030

0.0035

Pro

babili

ty

250 300 350 400 450 500 550 600 650 700Water (cf/ac)

0.000

0.001

0.002

0.003

0.004

0.005

0.006

0.007

0.008

200 250 300 350 400 450 500 550 600 650Water (cf/ac)

0.000

0.001

0.002

0.003

0.004

0.005

0.006

0.007

0.008

0 200 400 600 800 1000 1200Water (cf/ac)

0.0000

0.0005

0.0010

0.0015

0.0020

0.0025

0.0030

0.0035

0.0040

0.0045

500 1000 1500 2000 2500 3000 3500 4000Labor(hrs)

0.0000

0.0002

0.0004

0.0006

0.0008

0.0010

0.0012

Pro

babili

ty

300 400 500 600 700 800 900 1000Labor(hrs)

0.000

0.001

0.002

0.003

0.004

0.005

0.006

0.007

200 300 400 500 600 700 800 900 1000Labor(hrs)

0.000

0.001

0.002

0.003

0.004

0.005

0 5000 10000 15000 20000 25000Labor(hrs)

0.00000

0.00005

0.00010

0.00015

0.00020


ResultsSimulation of scenarios

Test drive: New water allocation rules that results in:- Scenario 1: 30% reduction in water available- Scenario 2: 50% reduction in water available


ResultsImpact of a reduced access to water


ResultsSummary of impacts

Baseline 30% reduction 50% reduction

Water available 2300 1610 1150Water used 2060 1610 1150Shadow value $0.0 $9.00 $25.3% loss net rev -2.76 -11.3% change hiring -11.7 -28.9


Conclusions

Hydroeconomic models are a valuable tool to inform policy and watermanagement

Hydroeconomic models may help develop water markets

Impact of water shortage on rural economies is complex. Losses donot scale with water shortage

Farmers react to reduced access to water (drought or policy) byreallocating land and water, hiring less or stress irrigating some cropsto reduce costs or improve profitability

Relative location of individual farmers in a region matters. Policy canensure fair and equal access to water and reduce economic imbalances


THANK YOU


marco p. maneta, phd - montana...

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