Agricultural Economics Department


Date of this Version



Cornhusker Economics (September 2011)


Published by University of Nebraska–Lincoln Extension, Institute of Agriculture & Natural Resources, Department of Agricultural Economics. Copyright © [2011] Board of Regents, University of Nebraska.


In Nebraska, irrigation is the best risk management tool to hedge against weather variations that negatively impact crop production. An agricultural producer’s ability to “make rain” is insurance against yearly variation in both yields and financial returns. As technology has progressed, reducing labor requirements and increasing efficiency of water application, irrigation has become a mainstay on thousands of Nebraska farms. In fact, the state ranks first in irrigated acres.

Along with increased irrigation come irrigation regulations to control over-use or abuse of water rights. With legal restrictions forcing the year to year management of irrigation allocations, some producers in Nebraska are faced with another management decision. System capacity, or a well’s ability to produce a certain volume of water, can become problematic during a growing season. If a producer encounters a period of dry weather during a critical period of crop development, and cannot meet the crop requirements due to limited system capacity, they may experience a reduced yield.