Date of this Version
O'Donnell, E., L. Nogueira, and W. Peterson. 2018. "Irrigation Management, Environment, and Profits: Who Wins?
The impact of irrigation technology on farmers’ management strategies and resulting environmental benefits depends upon agronomic properties and market forces. We evaluate the role of deficit irrigation using soil moisture probe technology on corn yield and evapotranspiration, which is a measure of water use efficiency. Evapotranspiration represents the water that transits through the plant during planting to harvest (transpiration) and the evaporation from the soil into the environment, or the displaced water in the production process. We develop yield and evapotranspiration response functions to inform a constrained profit maximization model used to identify the optimal irrigation level across a variety of input and output prices, expected rainfall and government policy limiting irrigation scenarios. Our results indicate that when including irrigation and output costs, farmers' profit is maximized at full irrigation across average observed output and input prices. When increasing input prices and/or decreasing output prices, profit maximization changes as well as the optimal amount of irrigation. Limiting irrigation by constraining evapotranspiration by a small amount has a large negative effect on farmers' profit. The technology evaluated in this study is not widely used by farmers, making our results helpful in understanding the implications of deficit irrigation and soil moisture probes.