22 February 2009

Expensive Water Increases Conservation

This story press release illustrates some basic economics:
The California Farm Water... coalition's analysis shows that while agricultural water use is almost unchanged during the past 40 years, crop production figures have increased dramatically.

In 1967, the state's farmers applied 31.2 million acre-feet of water on their irrigated cropland. In 2000, that figure was 34.2 million acre-feet, an increase of 9.6 percent. During the same period, acres planted increased about 8 percent.

But production volume for field crops, fruit and nut crops, and vegetable and melon crops jumped from 35.8 million tons to 67.7 million tons, an increase of 89 percent.

[snip]

A coalition survey of irrigation companies and suppliers shows that between 2003 and 2008, California farmers invested more than $1.5 billion on drip and microsprinkler irrigation technology. About 1.3 million acres had high technology irrigation systems installed during the period.

[snip]


In addition to installing on-farm irrigation technology, many farmers engage in other kinds of conservation practices, for example use of cover crops, minimum tillage, water recycling and mulching.

"Let me put the decision this way," said farmer Ted Sheely of Lemoore. "When we converted to underground drip tape we saved about a tenth of an acre-foot of water per acre, but we also increased crop yield more than 20 percent. That's were the business economics come in."

Sheely says a farmer can make the conversion and pay for the cost of installing the system in four or five years.

"The high cost of water, however, isn't something we can escape. We use drip on tomatoes and all our permanent crops, pistachios and winegrapes. We provide the precise amount of water we want," he said. "On the other hand, it doesn't matter how much drip equipment you put in, if you don't have water to send down the line. Right now we don't have enough water to supply all the high-tech irrigation systems that are out there."
Farmers will spend money to increase efficiency when water becomes too precious to waste. That's happening NOW because of man-made shortages (price too low --> Demand exceeds Supply), which are set to get worse. The next step is to reduce the cost of shortages (in fact end shortages) with markets that will give farmers accurate signals of what water is worth AND allow them to reallocate water so that additional conservation investments can be avoided, and losses from shortages and rationing are minimized.

Bottom Line: Farmers will conserve water when it makes sense to do so, and market prices give the most accurate feedback on what's sensible. More markets, please!

4 comments:

Captain Flounder said...

Whether it's a press release or a "real story", it reports on a trend that needs to be charted against the hyperbolic charge that farms waste water in almost biblical proportions. E.g., Gleick, et al.

Fact is, farms have been slowly but steadily going to more efficient systems over a good deal of time, as new technologies become available and cost-effective.

At the same time, these improvements tend to be steady but incremental, and no "quantum leap" is available that will solve California's ENORMOUS water shortfalls of the present. Not without major shocks to food supply, farm and non-farm employment, and California's GDP. And not without offshoring the environmental footprint of our food supply - i.e., water supply and quality questions, land use questions, greenhouse gas questions.

The continuing drive for efficiency needs to be put in context. Good, yes. Panacea, no. Way to avoid need for new dams? No.

David Zetland said...

@CF -- I agree with you on everything except the dams...

:D

Captain Flounder said...

Concur with your assessment. Subjecting the current water supply to the rigors of the market, without new augmenting it by building new dams and reservoirs, will in the end result in efficient allocation and the elimination of excess demand.

It's just that that particular result will come at a higher price point for water, than if we did the same thing AND added new supply. That too, would result in an efficient allocation, but at a lower price point for water.

I guess the difference of opinion on dams comes in where you think the new price point should be. If you don't care how high it goes and are dam-averse, then you keep the supply fixed and let the market pound the demand side. If you want a lower price point in order to preserve as much of the price-sensitive demand (i.e., California agriculture, and - in a perfect world - environmental flows, if you really want a comprehensive market) as possible, then you go with augmented supply.

One thing's for sure: the urbs will be able to buy their water. The question is whether they do that by edging agriculture off the California map and into third-world locations. (Saving you previous thoughts about off-shoring environmental problems from repetition here.) And whether environmental values get a "free pass".

David Zetland said...

@CF -- Actually, I don't think there are any possibilities for new dams that will have benefits in excess of costs (enviro, construction, community, etc.)