Informing drought mitigation policy by estimating the value of water for crop production

Abstract

Farmers use irrigation to mitigate drought risk and reduce yield uncertainty. A clear understanding of the monetary value of irrigation water and how it varies across time and space can help to inform farmers and policymakers about the potential impacts of water shortages and reduce uncertainty in decision making. Here, we introduce a framework for understanding the economic value of water used to produce corn in the central High Plains region during the period 2010–2017. Our analysis uses publicly available data for corn price and for irrigated and non-irrigated yields and incorporates irrigation requirement adjustments to account for the hydrologic balance. The findings suggest that the per unit value of irrigation water is highest not during severe droughts and not in more arid areas of the study region, but rather when and where irrigation can make the largest improvements to average crop productivity. Policy changes informed by these results might help to mitigate the impacts of future droughts on agriculture, especially in areas where climate change may lead to large increases in supplemental irrigation.