22 July 2009

The Department of Messing Up Farming

The Pacific Institute has released an updated version of their report on agricultural water conservation.

My response to their report from last year ("farmers are not dumb") was based on their notion that farmers need only install high-tech irrigation technology (e.g., drip) to save water. I pointed out that farmers are not going to do that unless it's profitable. Peter Gleick and I had an argument about that opinion; see comments in the original post, this and this.

Right. So that's some background. What about this year's version?

Here are my initial impressions:

First, the PI authors claim that California farmers can use efficient irrigation technologies to save about 5.5 maf of water in an average year. That's about 14 percent of the State's water or about 17 percent of what farmers use now.

Second, they make extensive reference to the cost of installing this technology (good!). Unfortunately, those costs are BIG: Efficient irrigation technology will cost $4.2 billion (or more) and "save" about 1.1 maf in an average year.* That's about $3,800/af conserved. Assuming a ten-year payback, that's $380/af, which is pretty damned expensive when farmers pay about $10-30/af now...

Third, they mention the need for water pricing and markets to create incentives to conserve water. Good!

Fourth, they call for extensive monitoring and reporting on water use. While I support that idea for ground water, I do NOT support it for overall water use. Why? It doesn't matter how much water is being used when its owner is making the decision. Ground water is different because it's often shared by many.

Fifth -- and this is my biggest point -- they propose that the cost of conservation be paid by a combination of tax breaks, government grants and other subsidies.** In other words, they propose to save pennies by spending dollars. This idea is totally backwards, unwieldy and probably doomed to failure. Why? Because subsidies rarely create the anticipated changes in behavior. You know that law? The Law of Unintended Consequences? That's where the title of this post comes from -- the inevitable government bureaucracy that will be interfering with farming decisions.

In conclusion, I think that this exercise in simulation should not be implemented. If it were, it would not produce the promised results.

Bottom Line: Farmers use a lot of water. If you want them to use less, give them a profitable reason, i.e., selling that water for more money, elsewhere.
* Note that "saved" water is really a reduction in applied water. Flood irrigation doesn't waste water when excess seeps into ground water; see this and this.

** They said the same thing in 2008. I said this:
Besides calling for a "realignment" of subsidies to discourage farmers from growing low-value crops -- something that makes no sense when farmers grow the most-profitable crops they can -- they think that farmers should get "tax breaks for water-saving irrigation systems." Those tax breaks would change the profitability of certain practices, which means that farmers are bound to react to them -- but at what cost? (Remember ethanol!)
Addendum: Looks like Spreck @ EDF and I agree.

11 comments:

Peter Gleick said...

David, your post reminds me of the classic economist joke: The boy walking down the street with his economist father (is this you?) says "Daddy, daddy, stop, there's a $20 bill on the ground." His father pulls on his hand and says "Don't be ridiculous. If there was a $20 bill on the ground, someone would have found it already."

Your numbers for the cost of drip irrigation are both wrong and misleading. Many farmers are already putting in drip (or cheaper but still efficient sprinklers), so it must be cost effective to do so (after all, we argue farmers are smart, not (as you say) stupid.)

Furthermore, "drip irrigation" is only one of many, many things that we suggest, and only the most expensive. Many other efficiency improvements are far cheaper.

Finally, we have no choice, if we want to save agriculture, to rethink it for the 21st century. There will be little, if any, new supply. So what's the option? All of the things we recommend (including many of the economic solutions you favor).

Wayne Bossert said...

Interesting reading on the issue of ag efficiency upgrades and their impacts on water use. I have followed the first 6 irrigation system conversions (traditional flood and center pivot irrigation being converted to subsurface drip (SDI)) here in NW Kansas and have found that in all but one case the producers pumped less water, but in all cases the producers used more water consumptively than they did before the conversions.

In all 6 cases following conversion, one of 4 things happened. 1) The producer added acres because of the high cost of the system and the newly acquired water application capability; 2) they began fully irrigating crops that had under the old system been deficit irrigated; 3) Due to lowering well capacities they were about to abandon irrigation altogether and return to dry land production but could now continue consumptive irrigation for another decade or so; or 4) were able to irrigate a higher consumptive use (more profitable) crop with the added efficiency.

The research literature also speaks to the crops natural ability to simply use more water from a highly efficient SDI system due to irrigation timings, etc., even when pumpage, acreage and cropping don't change.

My point is that consumptive water use is the yardstick we all need to be using when discussing irrigation efficiency and water supply. In our region (Ogallala aquifer - a closed system) improved irrigation efficincy will tend to increase consumptive water use unless strict acreage and/or cropping patterns are adjusted downward to sufficiently offset the increased ET usage. Thus far government has not been able to adequately address these offsets - but we're working on them.

In CA where dual water supplies are available, the consumptive water arguments are made more complicated, but I think just as important.

I have read the PI report and while it acknowledges the importance of consumptive water use, I'm not certain this concept translated appropriately into the suite of recommendations, which I think simplified the ag efficincy arguments too much.

Both Mr. Gleick and Mr. Zetland make valid points, but in the end, the amount of water consumptively used is the only measure of water conservation in the ag community.

Let me end by saying that the SDI systems are truely marvels at irrigation water use efficiency, but they by themselves will not in all cases conserve the water many think they will.

Damian said...

Both good comments above...

The picture pulled from the report has most of the savings coming from scheduling, an interesting point. I suspect as the report mentions that to implement fine-tuned irrigation scheduling requires on demand water, which most districts do not have. On demand is expensive.

SO while there is plenty of room for improvement, the easiest way to find it is to not have to find it--as in let the farmers find the easiest way to conserve once they are faced with increasing block rate pricing akin to what Broadview WD did in the late 80's.

Josh Harkinson said...

Thanks for the input on the Mother Jones blog, David. I respond to your thoughts here:

http://www.motherjones.com/blue-marble/2009/07/report-huge-potential-conservation-end-california-water-crisis

Anonymous said...

It was unfortunate that Pacific Insitute used sources that were so incredibly out of date to describe "current conditions". One of the source documents describing irrigation technology was from 1988, Renault, D. (1988). The price data was from a report published in 2003.

Of course, if they used current materials, it would have undercut the message.

The discussion on regulated deficit irrigation was particulary egregious in its misrepresentations.

Of course, it is important to remember that this is a propaganda piece from a lobbying organization.

David Zetland said...

@Peter -- I used numbers from your report. Are you saying that it's wrong? If it's right -- and I chose the high ones -- then do you want to retract the section on drip efficiency? That means you lose 1 maf of "savings." Then we can go looking for more $20 bills...

@Wayne -- excellent point!

@Damian -- it appears that you found the next non-existant $20 bill.

@Anonymous -- some people have said the same thing. PI is funded by the Packard Foundation. Are either of these (unofficial) lobbying organizations?

Anonymous said...

@David,

I have been in enough meeting with both Farm Bureau and PI people. They are two sides of the same coin. Both lobbyists, both have their constituents that they need to satisfy/advance their interests. Both need to satisfy their masters to continue to recieve funding.

Mister Kurtz said...

To their credit, the PI folks have shown willingness to modify some of the more doctrinaire positions their previous work espoused. But suggesting that the best way to encourage growers to pay for irrigation improvements would be through some governmental policies that would reward or punish water users, and do so free of graft, politics, and general incompetence is hopelessly optimistic. Especially when we have a mechanism--markets--- that can rapidly adjust to changes in supply and demand patterns both for crops and for water.
Mr. Bossert makes an excellent point that the "conservation before all" people need to remember. If you look only at caloric intake, Americans should stop eating lunch on Tuesdays, and thereby "save" enough food to prevent millions from starving. What is wrong with this postulate?

Anonymous said...

If we subsidize the irrigation technology, it seems possible that it could lead to more irrigated acres and production rather than less water use.

If prices were raised substantially, some of these efficiency investments would probably made, but it seems possible that some of the water savings would come from a reduction in irrigated acres.

This is similar to the debate about fuel efficiency standards for vehicles vs. gas taxes.

Anonymous said...

Just wanted to note that there isn't a formally trained economist among the "team."

David Zetland said...

@Anon -- you may have found the root problem. I've offered to go to Oakland to help. Nothing so far... :(