Farm Resilience to Water Supply Variability: An Econometric Analysis of Risk Management Strategies in the Mexicali Valley, Mexico

Abstract

In the lower Colorado River in the western United States and northern Mexico, water supplies are being constrained by increasing competition from urban populations, ecosystems, and the pressures of climate change. Regional stakeholders are interested in how farmers could reduce consumptive use of water and/or water diverted while still maintaining profitability. Two promising risk management strategies have been highlighted, the adoption of cement lining of parcel-level canals and the diversification of crop portfolios by adding a crop with a lower consumptive use of water. Yet little is known about the economic feasibility of these options and current adoption patterns. This thesis, focused on the Mexicali Valley of Mexico, is the result of multi-faceted research over two years including numerous interviews with water managers and other stakeholders as well as 180 detailed farm household surveys conducted in 2012. The results provide insights into the questions of regional water supply reliability and farm resilience to uncertainty in irrigation water supplies. The study finds evidence that crop diversification and cement lining of parcel-level irrigation canals are often considered economically feasible by farmers at the farm level. Specifically, past problems with water supplies are positively associated with investment in the two strategies. Irrigation water delivery delays are more likely to lead to crop diversification while irrigation delivery shortfalls are more likely to be associated with the adoption of water conserving technology. These conclusions provide valuable information to a wide range of stakeholders that can lead to more effective water management at the regional level.