Transcript nespal.cpes.peachnet.edu

Economic Value of Water for
Agricultural Production in SW
Georgia
Water Summit XIV
Meeting Georgia’s Water Demands in the 21st Century
Albany, GA
June 17, 2008
Mark H. Masters
ASU 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 Value
Lower Flint = $1.820 billion
GA = $11.5 billion
Ag Tourism &
Other
11%
Row & Forage
Crops
30%
Poultry & Eggs
23%
Livestock &
Aquaculture
9%
Fruits and Nuts
3%
Forestry &
Products
3%
Vegetables
15%
Ornamental
Hort.
6%
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 Basin
Agriculture and Directly Related Businesses IMPACT
Direct $ (millions)
Indirect $ (millions)
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
Agriculture + Direct
Total
$5.8 Billion – 34.45% of total economy
Compiled 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 Crop
Baseline
20%
30%
40%
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
-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
Ichaway
Spring
140,130
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
Irrig
(ac/in)
$/unitb
Peanut 5047 lb/ac 1105 lb/ac
10.5
$.225
Cotton 1523 lb/ac
448 lb/ac
11.15
$.70
17 bu/ac
14.95
$4.50
Crop
Corn
Irrigated
Yielda
194 bu/ac
Non-Irrig
Yield
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 Results
Output (1.25)
Multiplier
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
20% Reduction in Irrigated Acreage
Ichaway Region
Spring Creek Region
Output
Employment
Output
Employment
-$270,385
-1
-$2,082,682
-2
$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
-$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
Manufacturing
Non-Manufact.
Mining
Services
30% Reduction in Irrigated Acreage
Ichaway Region
Spring Creek Region
Output
Employment
Output
Employment
-$521,455
-3
-$4,972,266
-5
$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
Manufacturing
Non-Manufact.
Mining
40% Reduction in Irrigated Acreage
Ichaway Region
Spring Creek Region
Output
Employment
Output
Employment
-$730,153
-4
-$7,040,440
-7
$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
Manufacturing
Non-Manufact.
Mining
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
Permitted Acreage
Cotton (acres):
39,022
75,279 GW – 1,680 SW
Peanut (acres)
21,744
“Wetted” Acreage
Corn (acres)
5,064
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
Capacity Use
10,356 18%
-- Within 3 Miles --
Restricted Use
21,134 35%
Consvn Use
27,880 47%
59,370 Acres (90%)
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 Laboratory
Multi-Crop Irrigation Research Farm
1523
1400
1271
1200
1000
778
800
600
448
400
CY 2007
Cotton Revenues
& Costs
200
0
100%
66%
33%
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
Not including returns to management, fixed assets, and overhead.
200
194
150
126
100
66
50
17
CY 2007
Corn Revenues
& Costs
0
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
Not including returns to management, fixed assets, and overhead.
5500
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
5047
4168
2684
1105
100%
66%
CY 2007
Peanut Revenues
& Costs
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
Not including returns to management, fixed assets, and overhead.
A Snapshot Value of Irrigation
$400.00
$300.00
$ per Acre
$200.00
$100.00
$0.00
-$100.00
-$200.00
-$300.00
Corn
Cotton
Peanut
Irrigated
$257.03
$246.29
$350.31
Non-Irrigated
-$209.18
-$128.10
-$251.40
$31.18/inch
$33.58/inch
$57.31/inch
Caution: 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
$5.00
$4.50
$3.50
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
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$0.00
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$ per gallon
$4.00
Moving Forward
• We are better positioned to plan for agricultural
water use …kind of
–
–
–
–
Data collection (revised models)
Outreach
Interaction and compilation of programs
Statutes
• Conservation
– Acceptance of irrigation scheduling, conservation
tillage and system upgrade programs
– Built-in conservation in the form of energy prices
• Participation in planning process
Mark H. Masters
ASU Flint River Water Policy Center
[email protected]
229-430-2900 x36
Fertilizer Prices ($/ton)
$500
$450
$400
$350
$300
$250
$200
$150
$100
$50
19
8
19 4
8
19 5
86
19
8
19 7
88
19
89
19
9
19 0
91
19
9
19 2
9
19 3
94
19
9
19 5
9
19 6
9
19 7
9
19 8
99
20
0
20 0
0
20 1
02
20
0
20 3
04
20
05
20
0
20 6
07
$0
Nitrogen 46%
Potassium chloride 60% potassium
Diammonium phosphate (18-46-0)