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Farm level economic analysis of subsurface drip irrigation in Ontario corn production

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  • Jacques, David
  • Fox, Glenn
  • White, Peter

Abstract

This paper examines the economic feasibility of a subsurface irrigation system for a representative corn producer in Norfolk County, Ontario, Canada. We use stochastic capital budgeting to generate a distribution of net present values for this investment. Future corn yields and corn prices were treated as distributions. Under our base assumptions, the subsurface drip irrigation system has a negative expected net present value, meaning that it would not be a worthwhile investment for a corn farmer at the present time. The system's ability to increase yields has the largest effect on its expected net present value. Attempts to improve the system's economic value should focus on increasing its effect on yields in years with typical agronomic conditions. With reasonable assumptions for other system parameters, the initial cost of a 40.5 ha system would have to be reduced to $165,000 to have a positive net present value 50% of the time or the system would have to increase corn yields by 33% in years with typical growing conditions to achieve the same net present value outcome.

Suggested Citation

  • Jacques, David & Fox, Glenn & White, Peter, 2018. "Farm level economic analysis of subsurface drip irrigation in Ontario corn production," Agricultural Water Management, Elsevier, vol. 203(C), pages 333-343.
    • Handle: RePEc:eee:agiwat:v:203:y:2018:i:c:p:333-343
    DOI: 10.1016/j.agwat.2018.03.018
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    References listed on IDEAS

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    1. Tor N. Tolhurst & Alan P. Ker, 2015. "On Technological Change in Crop Yields," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 137-158.
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    Cited by:

    1. Yongqiang Zhang & Hao Sun & Maosheng Ge & Hang Zhao & Yifan Hu & Changyue Cui & Zhibin Wu, 2023. "Difference in Energy Input and Output in Agricultural Production under Surface Irrigation and Water-Saving Irrigation: A Case Study of Kiwi Fruit in Shaanxi," Sustainability, MDPI, vol. 15(4), pages 1-18, February.
    2. Jovanovic, N. & Pereira, L.S. & Paredes, P. & Pôças, I. & Cantore, V. & Todorovic, M., 2020. "A review of strategies, methods and technologies to reduce non-beneficial consumptive water use on farms considering the FAO56 methods," Agricultural Water Management, Elsevier, vol. 239(C).
    3. Ghadge, Abhijeet & van der Werf, Sjoerd & Er Kara, Merve & Goswami, Mohit & Kumar, Pankaj & Bourlakis, Michael, 2020. "Modelling the impact of climate change risk on bioethanol supply chains," Technological Forecasting and Social Change, Elsevier, vol. 160(C).
    4. Xu, Qin & Fox, Glenn & McKenney, Dan & Parkin, Gary, 2019. "A theoretical economic model of the demand for irrigation water," Agricultural Water Management, Elsevier, vol. 225(C).

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