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WWRC 85-17(g)
An Analysis of Alternative Management Strategies of Irrigators Facing Rising Electricity Rates and Declining Groundwater Tables

Abstract

Irrigators using center pivot irrigation systems in Southeastern Wyoming face a difficult combination of factors. Rising electricity costs, a declining groundwater table and the cost-price squeeze combined have reduced the profitability of producing crops under center pivot systems. Some strategies irrigators may consider to improve the economic returns with center pivot irrigation systems are:
1) converting high pressure to low pressure systems
2) improving pumping plant and/or applications efficiencies
3) change in cropping patterns to use less water
4) reduce the application of water where the loss in revenue from decreased yields are less than the savings in power cost.

This study analyzed the economic impact of selected management strategies on irrigators in Southeastern Wyoming. In analyzing the economic impact, a model farm using center pivot irrigation was developed. The economic analysis is conducted using a crop evapotranspiration and yield model, a pump cost simulation model and a linear programming model. Results from the two simulation models are used as inputs to the linear programming which determines the optimal crop mix under alternative irrigation strategies for the yields, prices and costs associated with those alternatives.

Results of this analysis suggest that the most promising management strategies for maintaining the profitability of center-pivot irrigation seem to be improving pump and/or application efficiencies, conversion to low-pressure pivots and load control programs. It must be emphasized, however, that these short-run adjustments to maintain net returns cannot be extended into the future indefinitely. As long as recharge rates are less than extraction rates and electricity costs continue to rise, the long-term forecast is for some abandonment of center-pivot irrigation from groundwater.

It should also be pointed out that any attempt to predict the future involves a great deal of uncertainty. In particular, any change in technology that would affect pumping costs and/or crop yields could change the results substantially. However, the results of this analysis suggest continued economic pressures on center pivot irrigation. Only the most efficient operators may be able to survive to that time when groundwater pumping will approximately equal natural recharge rates.

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