IDEAS home Printed from https://ideas.repec.org/p/ags/aaea16/235661.html
   My bibliography  Save this paper

Irrigation Adoption, Groundwater Demand and Policy in the U.S. Corn Belt, 2040-2070

Author

Listed:
  • Van Dop, Molly
  • Gramig, Benjamin M.
  • Sesmero, Juan P.

Abstract

Climate change across the U.S. Corn Belt will significantly increase precipitation variability and temperatures by midcentury. Corn and soybean producers will seek to find strategies that may help to mitigate the potentially negative effects on yield. The adoption of irrigation technology has increased over the last several decades to improve yields in areas with insufficient rainfall, and is currently being adopted by producers who are choosing to minimize risk due to weather variability. To see if this trend in irrigation adoption has the potential to expand in the wake of climate change, this study uses weather data, crop yields, and water use from four General Circulation Models (GCMs) under Representative Concentration Pathway (RCP) 8.5 and crop models to evaluate the profitability of the irrigation investment. The data drives Net Present Value and internal rate of return calculations of investment in irrigation equipment for the present (1980-2005) and midcentury (2040-2070). The Net Present Value of irrigation investment for midcentury producers is largely driven by the yield response to irrigation by soybeans under future climate conditions. While the irrigation of corn is profitable in some locations, namely the western Corn Belt, the locations where irrigating corn in the future is largely the same as in the contemporary period. Under future weather conditions, the area where irrigating soybeans becomes profitable is greatly expanded, likely due to CO2 fertilization effects and higher temperatures in the northern Corn Belt. Projected irrigation water demand increases across the entire Corn Belt, both from a relative increase in applications from current irrigators, and an increase in the total number of irrigators across the central and eastern Corn Belt. The increase in profitability for irrigation, and the potential increases in water demanded has important policy implications for the future, in order to mitigate the potential impacts of climate change while ensuring water supplies are available and safe for the future.

Suggested Citation

  • Van Dop, Molly & Gramig, Benjamin M. & Sesmero, Juan P., 2016. "Irrigation Adoption, Groundwater Demand and Policy in the U.S. Corn Belt, 2040-2070," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235661, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea16:235661
    DOI: 10.22004/ag.econ.235661
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/235661/files/mvandop_aaea_05242016.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.235661?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Sangtaek Seo & Eduardo Segarra & Paul D. Mitchell & David J. Leatham, 2008. "Irrigation technology adoption and its implication for water conservation in the Texas High Plains: a real options approach," Agricultural Economics, International Association of Agricultural Economists, vol. 38(1), pages 47-55, January.
    2. Witsanu Attavanich & Bruce McCarl, 2014. "How is CO 2 affecting yields and technological progress? A statistical analysis," Climatic Change, Springer, vol. 124(4), pages 747-762, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sadia A. Jame & Laura C. Bowling, 2020. "Groundwater Doctrine and Water Withdrawals in the United States," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 34(13), pages 4037-4052, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Larsen, Ryan & Ripplinger, David, 2015. "Irrigation Adoption in Central North Dakota: a real options approach," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205681, Agricultural and Applied Economics Association.
    2. Chin‐Hsien Yu & Bruce A. McCarl & Jian‐Da Zhu, 2022. "Market response to typhoons: The role of information and expectations," Southern Economic Journal, John Wiley & Sons, vol. 89(2), pages 496-521, October.
    3. Jithitikulchai, Theepakorn, 2023. "The effect of climate change and agricultural diversification on the total value of agricultural output of farm households in Sub-Saharan Africa," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 18(2), October.
    4. Elwin G. Smith & Mark E. Eiswerth & Terrence S. Veeman, 2010. "Current and Emerging Water Issues in Agriculture: An Overview," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(s1), pages 403-409, December.
    5. Tubetov, Dulat & Maart, Syster Christin & Musshoff, Oliver, 2012. "Comparison of the investment behavior of Kazakhstani and German farmers: An experimental approach," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124650, Agricultural and Applied Economics Association.
    6. Boyer, Christopher N. & Larson, James A. & Roberts, Roland K. & McClure, Angela T. & Tyler, Donald D. & Smith, S. Aaron, 2014. "Probability of Irrigated Corn Being Profitable in a Humid Region," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162470, Southern Agricultural Economics Association.
    7. Lima, Dmitry & Colson, Gregory & Karali, Berna & Guerrero, Bridget & Amosson, Stephen & Wetzstein, Michael, 2013. "A New Look at the Economic Evaluation of Wind Energy as an Alternative to Electric and Natural Gas-Powered Irrigation," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 45(4), pages 739-751, November.
    8. Chen, Le & Rejesus, Roderick M. & Brown, Zachary S. & Boyer, Christopher M. & Larson, James A., 2020. "Adoption of Cover Crops under Uncertainty: A Real Options Method," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304391, Agricultural and Applied Economics Association.
    9. Ihli, Hanna Julia & Maart, Syster Christin & Musshoff, Oliver, 2012. "Investment and Disinvestment in Irrigation Technology – An Experimental Analysis of Farmers’ Decision Behavior –," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124532, Agricultural and Applied Economics Association.
    10. Sharp, Misti & Manning, Dale T. & Hoag, Dana, 2016. "Uncertainty and Technology Adoption with Imperfect Property Rights: Lessons from the Arkansas River Valley," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235963, Agricultural and Applied Economics Association.
    11. Christopher N. Boyer & Eunchun Park & Seong D. Yun, 2023. "Corn and soybean prevented planting acres response to weather," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(2), pages 970-983, June.
    12. Athanasios Balafoutis & Bert Beck & Spyros Fountas & Jurgen Vangeyte & Tamme Van der Wal & Iria Soto & Manuel Gómez-Barbero & Andrew Barnes & Vera Eory, 2017. "Precision Agriculture Technologies Positively Contributing to GHG Emissions Mitigation, Farm Productivity and Economics," Sustainability, MDPI, vol. 9(8), pages 1-28, July.
    13. Tubetov, Dulat & Maart, Syster Christin & Musshoff, Oliver, 2012. "Comparison of the Investment Behavior of German and Kazakhstani Farmers: an Experimental Approach," GlobalFood Discussion Papers 122422, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    14. Mu, Jianhong E. & McCarl, Bruce A. & Sleeter, Benjamin & Abatzoglou, John T. & Zhang, Hongliang, 2018. "Adaptation with climate uncertainty: An examination of agricultural land use in the United States," Land Use Policy, Elsevier, vol. 77(C), pages 392-401.
    15. Cheng, Muxi & McCarl, Bruce A. & Fei, Chengcheng, 2022. "Impact of Climate Change on the U.S. Livestock Sector," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322255, Agricultural and Applied Economics Association.
    16. Thompson, Wyatt & Lu, Yaqiong & Gerlt, Scott & Yang, Xianyu & Campbell, J. Elliott & Kueppers, Lara M. & Snyder, Mark A., 2018. "Automatic Responses of Crop Stocks and Policies Buffer Climate Change Effects on Crop Markets and Price Volatility," Ecological Economics, Elsevier, vol. 152(C), pages 98-105.
    17. Chen, Xiaoping & Qi, Zhiming & Gui, Dongwei & Gu, Zhe & Ma, Liwang & Zeng, Fanjiang & Li, Lanhai, 2019. "Simulating impacts of climate change on cotton yield and water requirement using RZWQM2," Agricultural Water Management, Elsevier, vol. 222(C), pages 231-241.
    18. Elizabeth Marshall, & Marcel Aillery, & Scott Malcolm, & Ryan Williams,, 2015. "Climate Change, Water Scarcity, and Adaptation in the U.S. Fieldcrop Sector," Economic Research Report 262203, United States Department of Agriculture, Economic Research Service.
    19. Danso, G.K. & Jeffrey, S.R. & Dridi, C. & Veeman, T., 2021. "Modeling irrigation technology adoption and crop choices: Gains from water trading with farmer heterogeneity in Southern Alberta, Canada," Agricultural Water Management, Elsevier, vol. 253(C).
    20. Hanna J. Ihli & Syster C. Maart-Noelck & Oliver Musshoff, 2014. "Does timing matter? A real options experiment to farmers' investment and disinvestment behaviours," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(3), pages 430-452, July.

    More about this item

    Keywords

    Agricultural and Food Policy; Environmental Economics and Policy;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea16:235661. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.