The economics of resource-conservation, pollution-reduction technology selection

Irrigated agriculture is a major consumer of limited water resources and also a substantial source of pollution. Use of modern irrigation technologies has been proposed as one of several possible solutions to problems of water resource scarcity and environmental pollution in many irrigated agricultural areas. An economic model to assess irrigation technology choice is developed, which expands many of the aspects developed in previous publications, and takes into consideration aspects such as weather conditions and the dual effects of input quality (soil and water). General relationships between variables are derived and tested for cotton and tomatoes under conditions prevailing on the west side of the San Joaquin Valley, California. The results from the empirical model provide the following main conclusions: (1) modern irrigation technologies serve to substantially reduce impacts of quality and weather differences on profitability; (2) the impacts of changing one input quality indicator are not independent of other input-quality indicators; (3) the categorization of technologies as ‘input saving’ or ‘yield increasing’ may be misleading; (4) technology choices are sensitive to product (crop) characteristics, and (5) taxation on pollution increases the likelihood of water conservation, adoption of modern technologies, or transition from one crop to another.