Mark H. Masters ASU Flint River Water Policy Center
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Economic Value of Water Economic Value of Water for Agricultural for Agricultural Production in SW Georgia Production in SW Georgia Wa Wa ter Summit XIV ter Summit XIV Meeting Georgia’s Water Demands in the 21 Meeting Georgia’s Water Demands in the 21 st st Century Century Albany, GA Albany, GA June 17, 2008 June 17, 2008 Mark H. Masters Mark H. Masters ASU Flint River Water Policy ASU Flint River Water Policy Center Center
description
Economic Value of Water for Agricultural Production in SW Georgia Wa ter Summit XIV Meeting Georgia’s Water Demands in the 21 st Century Albany, GA June 17, 2008. Mark H. Masters ASU Flint River Water Policy Center. Outline. - PowerPoint PPT Presentation
Transcript of Mark H. Masters ASU Flint River Water Policy Center
Economic Value of Water for Economic Value of Water for Agricultural Production in SW Agricultural Production in SW
GeorgiaGeorgia
WaWater Summit XIVter Summit XIVMeeting Georgia’s Water Demands in the 21Meeting Georgia’s Water Demands in the 21stst Century Century
Albany, GAAlbany, GAJune 17, 2008June 17, 2008
Mark H. MastersMark H. MastersASU Flint River Water Policy CenterASU Flint River Water Policy Center
Outline• What is the economic impact of agriculture to the
Lower Flint River Basin and SW GA as a whole?– Farm gate, direct and indirect output/employment
• What are the potential impacts of reducing irrigated acreage in Spring Creek and Ichaway sub-basins?– Scenarios from EPD planning documents– Assumptions
• Irrigation and yield data– Basin and region level
• Farm level impacts of reducing irrigation• Recent advances in knowledge base regarding
agricultural water use • Discussion
Lower Flint-Ochlockonee Planning District
• 14 Counties• All or part of 13
HUC 8 Watersheds
• Ag irrigation is predominant use of water– 658,561 acres
• Endangered species and critical habitat
• GA – FLA – AL
Farm Gate ValueLower Flint = $1.820 billion
GA = $11.5 billion
Fruits and Nuts3%
Vegetables15%
Poultry & Eggs23%
Ag Tourism & Other11%
Row & Forage Crops30%
Forestry & Products
3%
Ornamental Hort.6%
Livestock & Aquaculture
9%
Farm Gate Value
Row - Forage Vegetables % Irrig Rel
% Ag Tax
Baker $86,979,602 $38,298,500 $103,630 53.3% 68.0%
Calhoun $75,711,348 $31,795,329 $0 61.2% 43.5%
Colquitt $389,231,209 $50,013,893 $108,046,592 63.5% 15.6%
Decatur $206,547,141 $50,814,251 $79,234,866 70.7% 20.2%
Dougherty $52,715,118 $9,856,438 $159 57.8% 20.0%
Early $88,973,708 $55,507,969 $0 58.6% 21.4%
Grady $143,369,003 $16,910,334 $4,565,779 18.1% 28.7%
Lee $59,348,004 $28,627,451 $629,970 50.7% 19.1%
Miller $78,691,597 $48,734,639 $5,193,565 68.2% 42.1%
Mitchell $266,507,069 $57,949,822 $35,137,437 54.2% 36.0%
Seminole $79,961,262 $48,351,178 $7,709,923 64.8% 28.7%
Terrell $61,448,617 $35,020,050 $343,080 51.9% 43.8%
Thomas $105,775,140 $31,006,949 $4,435,986 38.3% 25.6%
Worth $122,447,414 $56,327,671 $20,215,765 63.0% 38.4%
Flint River BasinAgriculture and Directly Related Businesses IMPACT
Direct $ (millions) Indirect $ (millions)
Agriculture + Direct 3,748.511 495.772
Mining 0 60.428
Construction 0 0.190
Manufacturing 0 908.303
Utilities 0 54.167
Trade 0 51.128
Fin / Ins / Real Est 0 17.545
Services 0 173.275
Government 0 232.915
Other 0 64.155
Total $5.8 Billion – 34.45% of total economyCompiled by UGA Center for Agribusiness & Econ Development, Waters & McKissick, 2004
So what is the regional impact of irrigation?
• Concentration of modeling efforts in Ichaway and Spring Creek Sub-basins.
• EPD surface water models indicate low-flow violations under some conditions– Especially Spring Crk
• 326,204 permitted irrigated acres in these two basins – 153,263 (Ichaway)– 172,941 (Spring)– ≈ 62% of harvested land
• This analysis was limited to all surface water w/drawals and those ground water w/drawals out of the Upper Floridan as determined by EPD
• This amounts to roughly 241,000 irrigated acres– 100,890 in Ichaway– 140,130 in Spring
• Ichaway region includes Terrell, Randolph, Calhoun, and Baker Counties
• Spring Creek region includes Early, Miller, Seminole, and Decatur counties
Impact Model• IMPLAN
– IMpact analysis for PLANning– Input–Output model describing commodity
flows from producers to final consumers– Driven by purchases for final use or final
demand (in our case, lost revenue from not irrigating)
• Direct effects• Indirect Effects
– Multipliers
– Region specific• Base model (2006) or modified
Acreage Reduction by CropBaseline 20% 30% 40%
Ichaway 100,890 -20,178 -30,267 -40,356
Peanut -6,053 -9,080 -12,107
Cotton -9,080 -13,620 -18,160
Corn -5,044 -7,567 -10,089
Spring 140,130 -28,026 -42,039 -56,052
Peanut -8,408 -12,612 -16,816
Cotton -12,612 -18,916 -25,223
Corn -7,007 -10,510 -14,103
Numbers shown in RED were provided by EPD. Peanut, cotton, and corn acreage is roughly 86% of the total irrigated acreage in these two basins. Assume all reduction from these crops w/ the following distribution: PN (30%), CT (45%), CN (25%)
Crop Assumptions
CropIrrigated Yielda
Non-Irrig Yield
Irrig (ac/in)
$/unitb
Peanut 5047 lb/ac 1105 lb/ac 10.5 $.225
Cotton 1523 lb/ac 448 lb/ac 11.15 $.70
Corn 194 bu/ac 17 bu/ac 14.95 $4.50
a Yield and irrigation data collected during CY 2007 from USDA-ARS NPRL Multi-Crop Irrigation Research Farm.
b 2007 Estimated Georgia Prices compiled by UGA CAES.
IMPLAN ResultsOutput (1.25) Employment (1.23)
Direct Total Direct Total
Ich – 20% -$20,942,298 -$26,248,678 -282 -348
Ich – 30% -$40,106,216 -$50,309,324 -509 -632
Ich – 40% -$56,503,004 -$70,879,641 -710 -886
Output (1.43) Employment (1.49)
Direct Total Direct Total
Spr – 20% -$22,745,048 -$32,536,097 -236 -351
Spr – 30% -$55,756,953 -$78,949,839 -738 -1,001
Spr – 40% -$78,573,824 -$111,457,973 -1,032 -1,408
Multiplier
Ichaway Region Spring Creek Region
Output Employment Output Employment
Manufacturing -$270,385 -1 -$2,082,682 -2
Non-Manufact.
Mining $0 0 -$4,712 0
Construction -$29,653 0 -$46,296 -1
Trans/Utilities -$352,329 -4 -$566,119 -6
Ret/Whl Trade -$1,826,635 -22 -$2,759,443 -45
Fin/Ins/Real Est -$1,138,289 -8 -$1,074,667 -6
Services -$728,455 -15 -$1,475,578 -28
Government -$1,034,006 -2 -$1,240,668 -2
Farm -$20,868,926 -295 -$23,285,932 -262
TOTAL -$26,248,678 -348 -$32,536,097 -351
20% Reduction in Irrigated Acreage
Ichaway Region Spring Creek Region
Output Employment Output Employment
Manufacturing -$521,455 -3 -$4,972,266 -5
Non-Manufact.
Mining $0 0 -$12,555 0
Construction -$56,019 -1 -$107,894 -1
Trans/Utilities -$683,384 -8 -$1,379,986 -14
Ret/Whl Trade -$2,757,084 -34 -$5,068,457 -78
Fin/Ins/Real Est -$2,159,152 -16 -$2,600,434 -15
Services -$1,375,435 -29 -$3,447,003 -65
Government -$1,966,971 -3 -$2,971,338 -4
Farm -$40,789,824 -540 -$58,389,888 -819
TOTAL -$50,309,324 -632 -$78,949,839 -1,001
30% Reduction in Irrigated Acreage
Ichaway Region Spring Creek Region
Output Employment Output Employment
Manufacturing -$730,153 -4 -$7,040,440 -7
Non-Manufact.
Mining $0 0 -$17,349 0
Construction -$79,614 -1 -$153,576 -2
Trans/Utilities -$957,177 -11 -$1,945,300 -20
Ret/Whl Trade -$4,328,527 -53 -$7,774,979 -122
Fin/Ins/Real Est -$3,048,768 -22 -$3,676,840 -22
Services -$1,947,607 -41 -$4,911,122 -92
Government -$2,778,407 -5 -$4,203,855 -6
Farm -$57,009,388 -750 -$81,734,512 -1,138
TOTAL -$70,879,641 -886 -$111,457,973 -1,408
40% Reduction in Irrigated Acreage
Irrigation Reductions
Miller County Example
Flint River Drought
Protection Act • Inaugural auction held March
15, 2001– 33,101 acres retired from
irrigated production– Average bid: $136/acre– $4.5 million paid to growers
• Auction held again in 2002– 40,894 acres retired– Average bid: $128/acre– $5.2 million paid to growers
• Major changes for Act after Flint River Water Dev. and Conservation Plan passed March 2006
Flint River Drought
Protection Act • Designation of different
“use” areas• Ground water now
eligible for participation• Act may be targeted on
smaller watersheds• “Partial” buyout of an
agricultural permit• Involuntary suspension
provisions
Farm Gate Value: $78.7 million
Cotton (acres): 39,022
Peanut (acres) 21,744
Corn (acres) 5,064
Permitted Acreage
75,279 GW – 1,680 SW
“Wetted” Acreage
64,768 GW – 937 SW
Miller County Total
65,705 Irrigated Acres
Capacity Use 17,757 27%
Restricted Use 21,151 32%
Consvn Use 26,797 41%
Miller County Total
-- Within 3 Miles --
59,370 Acres (90%)
Capacity Use 10,356 18%
Restricted Use 21,134 35%
Consvn Use 27,880 47%
Illustrative Purposes Only – Of the 10,356 acres within 3 miles of a stream and in Capacity Use Areas, 91% are “Grandfathered” Permits. It is extremely likely these areas could be impacted by a Flint River Drought Auction with economic impacts highly localized.
What about at the farm level?
USDA/ARS National Peanut Research LaboratoryMulti-Crop Irrigation Research Farm
100% 66% 33% Non-irr
Gross Revenue ($0.70) $1066.10 $889.70 $544.60 $313.60
Variable Cost $556.81 $535.39 $484.98 $381.91
Irrigation Cost $88.00 $58.96 $29.04
Total VAR. Cost $644.81 $594.35 $514.02 $381.91
NET > VAR $421.29 $295.35 $30.58 -$68.10
Land($175 irrig -$60/dry)
$175.00 $175.00 $175.00 $60.00
NET>VAR & Land $246.29 $120.35 -$144.42 -$128.10
CY 2007 Cotton Revenues
& Costs
CY 2007 Cotton Revenues
& Costs
Not including returns to management, fixed assets, and overhead.Not including returns to management, fixed assets, and overhead.
1523
1271
778
448
0
200
400
600
800
1000
1200
1400
100% 66% 33%
100% 66% 33% Non-irr
Gross Revenue ($0.70) $970.00 $630.00 $330.00 $85.00
Variable Cost $429.97 $418.25 $388.13 $234.18
Irrigation Cost $108.00 $72.36 $35.64
Total VAR. Cost $537.97 $490.61 $423.77 $234.18
NET > VAR $432.03 $139.39 -$93.77 -$149.18
Land($175 irrig -$60/dry)
$175.00 $175.00 $175.00 $60.00
NET>VAR & Land $257.03 -$35.61 -$268.77 -$209.18
CY 2007 Corn Revenues
& Costs
CY 2007 Corn Revenues
& Costs
Not including returns to management, fixed assets, and overhead.Not including returns to management, fixed assets, and overhead.
194
126
66
17
0
50
100
150
200
100% 66% 33%
100% 66% 33% Non-irr
Gross Revenue ($450/ton)
$1135.58 $937.80 $603.90 $248.63
Variable Cost $532.77 $521.25 $509.52 $470.03
Irrigation Cost $77.50 $51.93 $25.58
Total VAR. Cost $610.27 $573.18 $535.10 $440.03
NET > VAR $525.31 $364.62 $68.80 -$191.40
Land($175 irrig -$60/dry)
$175.00 $175.00 $175.00 $60.00
NET>VAR & Land $350.31 $189.62 -$106.20 -$251.40
CY 2007 Peanut Revenues
& Costs
CY 2007 Peanut Revenues
& Costs
Not including returns to management, fixed assets, and overhead.Not including returns to management, fixed assets, and overhead.
5047
4168
2684
1105
05001000150020002500300035004000450050005500
100% 66% 33%
A Snapshot Value of Irrigation
-$300.00
-$200.00
-$100.00
$0.00
$100.00
$200.00
$300.00
$400.00
$ p
er A
cre
Irrigated $257.03 $246.29 $350.31
Non-Irrigated -$209.18 -$128.10 -$251.40
Corn Cotton Peanut
$31.18/inch $33.58/inch $57.31/inchCaution: This is an average and irrigation is NOT a linear function
Moving Forward
• We are better positioned to plan for agricultural water use …kind of– Data collection (revised models)– Outreach– Interaction and compilation of programs– Statutes
• Conservation– Acceptance of irrigation scheduling, conservation
tillage and system upgrade programs– Built-in conservation in the form of energy prices
• Participation in planning process
Diesel Fuel - Price per Gallon
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
Jan-
86
Jan-
88
Jan-
90
Jan-
92
Jan-
94
Jan-
96
Jan-
98
Jan-
00
Jan-
02
Jan-
04
Jan-
06
Jan-
08
$ p
er g
allo
n
Moving Forward
• We are better positioned to plan for agricultural water use …kind of– Data collection (revised models)– Outreach– Interaction and compilation of programs– Statutes
• Conservation– Acceptance of irrigation scheduling, conservation
tillage and system upgrade programs– Built-in conservation in the form of energy prices
• Participation in planning process
Fertilizer Prices ($/ton)
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
1984
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2001
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2004
2005
2006
2007
Nitrogen 46% Diammonium phosphate (18-46-0)
Potassium chloride 60% potassium
