Climate, Prices, and Federal Programs: Choices for Irrigated Agriculture

Abstract

Drought has gripped the arid American West in the Colorado River Basin since 2000. The majority of water consumed in the region is used by agricultural irrigation. Farm operations in central Arizona rely on a combination of local surface water, groundwater, the mainstem of the Colorado River, and Colorado River water imported to central Arizona through the Central Arizona Project (CAP). Groundwater is particularly important to agricultural viability because of its widespread availability. In previous decades, the abundance of this resource caused pumping rates to exceed replenishment resulting in water table declines in central Arizona. CAP water was made available for crop irrigation under financial arrangements that made it affordable to farmers and CAP use replaced much of their groundwater pumping. The recent federal declaration of a Colorado River shortage may prompt farmers to supplement reduced surface water with more groundwater. This study examines agricultural water use and crop mix selection in the major irrigation districts of central Arizona. It is important to study these decisions that affect the rate of groundwater consumption. Statistical models of crop mix and agricultural water deliveries are developed for a major Arizona crop, alfalfa, in the Phoenix, Pinal, and Tucson Active Management Areas (AMAs). Using panel data from 2008-2020, economic and climatic variables (crop prices, crop yields, water prices, temperature, and precipitation) are examined for effects on farmers’ water application, acreage, and crop mix decisions. Contributions of this work include an analysis of the Tucson AMA, federal commodity programs, and temperature and precipitation effects. Climate, federal commodity payments, and the gross revenues of crops have significant impacts on central Arizona crop mix. Irrigation district water deliveries are affected by the climate and the gross revenue of cotton plus wheat. Findings from this study can help inform recommendations for managing the impacts of impending changes in central Arizona’s agricultural CAP supplies.