Including the costs of water and greenhouse gas emissions in a reassessment of the profitability of irrigation

Maraseni, T. N. and Cockfield, G. (2012) Including the costs of water and greenhouse gas emissions in a reassessment of the profitability of irrigation. Agricultural Water Management, 103 (1). pp. 25-32. ISSN 0378-3774

Abstract

Irrigated cropping helps stabilise farm and regional income and contributes to productivity gains but the net benefits should include the full cost of water and greenhouse gas (GHG) emissions. This study examines the costs and returns of switching from a dryland rotation for four crops in the Darling Downs region of Australia, to a rotation of the same crops under irrigation, including greenhouse gas (GHG) values. The value chain, including all inputs was identified and emissions estimated using a range of studies and models. Over four year cropping cycle, the irrigated system would result in more than six times the emissions than from the dryland system. If GHG and water prices are not embedded in the production process, irrigation is more profitable per hectare. In this scenario, the landholder makes more than twice as much from the irrigated crops, with gross margins for the dryland and irrigated crop rotations of $1597 and $3490/ha, respectively. If the value of GHGs is included, the gap closes but irrigated crops are still more profitable. If however, a relatively high cost of the water, based on price ranges from the last decade, is included, then dryland crops are financially preferable. These results could be useful in designing national mitigation and water buy-back policies, both of which are being developed in Australia.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Permanent restricted access to published version due to publisher copyright policy.
Depositing User: Associate Professor Geoff Cockfield
Faculty / Department / School: Historic - Faculty of Business and Law - School of Accounting, Economics and Finance
Date Deposited: 24 Feb 2012 23:43
Last Modified: 11 Sep 2014 02:36
Uncontrolled Keywords: dryland crops; irrigated crops; legumes; water price; Australia
Fields of Research (FOR2008): 14 Economics > 1402 Applied Economics > 140201 Agricultural Economics
07 Agricultural and Veterinary Sciences > 0799 Other Agricultural and Veterinary Sciences > 079901 Agricultural Hydrology (Drainage, Flooding, Irrigation, Quality, etc.)
07 Agricultural and Veterinary Sciences > 0701 Agriculture, Land and Farm Management > 070101 Agricultural Land Management
Socio-Economic Objective (SEO2008): D Environment > 96 Environment > 9603 Climate and Climate Change > 960302 Climate Change Mitigation Strategies
B Economic Development > 82 Plant Production and Plant Primary Products > 8298 Environmentally Sustainable Plant Production > 829802 Management of Greenhouse Gas Emissions from Plant Production
Identification Number or DOI: doi: 10.1016/j.agwat.2011.10.014
URI: http://eprints.usq.edu.au/id/eprint/20866

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