Economic performance of irrigation capacity development to adapt to climate in the American Southwest

Growing demands for food security to feed increasing populations worldwide have intensified the search for improved performance of irrigation, the world's largest water user. These challenges are raised in the face of climate variability and from growing environmental demands. Adaptation measures in irrigated agriculture include fallowing land, shifting cropping patterns, increased groundwater pumping, reservoir storage capacity expansion, and increased production of risk-averse crops. Water users in the Gila Basin headwaters of the U.S. Lower Colorado Basin have faced a long history of high water supply fluctuations producing low-valued defensive cropping patterns. To date, little research grade analysis has investigated economically viable measures for irrigation development to adjust to variable climate. This gap has made it hard to inform water resource policy decisions on workable measures to adapt to climate in the world's dry rural areas. This paper's contribution is to illustrate, formulate, develop, and apply a new methodology to examine the economic performance from irrigation capacity improvements in the Gila Basin of the American Southwest. An integrated empirical optimization model using mathematical programming is developed to forecast cropping patterns and farm income under two scenarios (1) status quo without added storage capacity and (2) with added storage capacity in which existing barriers to development of higher valued crops are dissolved. We find that storage capacity development can lead to a higher valued portfolio of irrigation production systems as well as more sustained and higher valued farm livelihoods. Results show that compared to scenario (1), scenario (2) increases regional farm income by 30%, in which some sub regions secure income gains exceeding 900% compared to base levels. Additional storage is most economically productive when institutional and technical constraints facing irrigated agriculture are dissolved. Along with additional storage, removal of constraints on weak transportation capacity, limited production scale, poor information access, weak risk-bearing capacity, limited management skills, scarce labor supply, low food processing capacity, and absolute scale constraints, all can raise the economic value of additional irrigation capacity development. Our results light a path forward to policy makers, water administrators, and farm managers, who bear the burden of protecting farm income, food and water security, and rural economic development in the world's dry regions faced by the need to adapt to climate variability. (C) 2016 Elsevier B.V. All rights reserved.