A Method for comprehensively Assessing Economic Trade-Offs of New Irrigation Developments

To meet the anticipated increase in global demand for food and fibre products, large areas of land around the world are being cleared and infrastructure constructed to enable irrigation, referred to herein as ‘greenfield irrigation’. One of the challenges in assessing the profitability of a greenfield irrigation development is understanding the impact of variability in climate and water availability and the trade-offs with scheme size, cost and the sensitivity of crop yield to water stress. For example, is it more profitable to irrigate a small area of land most years or a large area once every few years? And, is it more profitable to partially or fully water the crop? This paper presents a new method for efficiently linking a river system model and an agricultural production model to explore the financial trade-offs of different management choices, thereby enabling the optimal scheme area and most appropriate level of farmer risk to be identified. The method is demonstrated for a hypothetical but plausible greenfield irrigation development based around a large dam in the Flinders catchment, northern Australia. It was found that a dam and irrigation development paid for and operated by the same entity is not, under the conditions examined in this analysis, economically sustainable. The method could also be used to explore the impact of different management strategies on the agricultural production and profitability of existing irrigation schemes within a whole of river system context.