An examination of deficit irrigation in Australian cotton systems using bioeconomic modelling and financial and risk analyses

An examination of deficit irrigation in Australian cotton systems using bioeconomic modelling and financial and risk analyses

Cotton is an important crop in Australia, where around 99% of the domestic crop is exported. In order to achieve the high yields and fibre quality for which Australian cotton is known, production systems require precise crop and field management, which includes irrigation management. Most Australian cotton is irrigated and more than 80% of irrigated cotton farms are located within the Murray-Darling Basin (MDB). Water resources in the MDB are however, subject to high demand and partial market forces, leading to generally increasing prices. Scarce water for irrigation is however a limitation on production. Previous studies have reported that deficit irrigation (DI) practices are among solutions that can be employed to ameliorate limited water availability. These studies have generally focused on the application of DI on cotton crops to improve WUE and maintain yield, with very little research investigating the adoption of DI in terms of short and long term investment decisions. Nor is there much research comparing DI under different irrigation systems. The aim of this thesis was to investigate the economic impacts of using DI under flood (FI), overhead sprinklers (OSI) and sub-surface drip (SDI) irrigation systems at both the field and enterprise scales. Biophysical simulations and economic modelling were carried out to achieve the objectives of this study. Goondiwindi, Moree, Narrabri, and Warren in the MDB were the study locations. The Agricultural Production System Simulator (APSIM)model was employed to simulate the impacts of different levels of DI practices for irrigation systems on lint yield, WUE and marginal water use efficiency(MWUE). The outputs of the APSIM model were used to calculate gross margins (GM/ha), (GM/ML), on average and for10-years. The 10-year net present value (NPV) was also estimated. Bio-economic modelling was also used to investigate the economic investment required for the adoption of DI for the three irrigation systems at the enterprise scale. This was done through analyses including the estimation of equivalent annual annuity (EAA), payback period, and annual cash flows (ACFs). The results showed that WUE and MWUE were maximised when applying between 40% and 80% of full irrigation (TF)across the three irrigation systems, but lint yield was maintained under the OSI and SDI systems for most locations by applying 80% of full irrigation (TF). Under the FI system, DI had no benefit in terms of increasing yield but showed marginal gains in terms of WUE, and MWUE. The results suggest that over time the OSI system offers the most economic benefits from using DI. By applying 40% of TF under the OSI system, the highest annual lint yields and the highest EAA were achieved. This system also attained the shortest payback period, with initial capital costs recovered within three years for all study locations compared to the FI and SDI systems at enterprise scale. The results from the modelling suggest that there is a net benefit from adopting DI under OSI and SDI, however the overwhelming majority of cotton is produced under FI systems, which showed little benefit. Therefore, realization of any significant gains in terms or either or both, increased returns on water used and less water used in the MDB, from DI would first require changes in irrigation systems.