of Texas

A dynamic optimization model which introduces an intertemporal nitrate-nitrogen residual function is used to derive and evaluate nitrogen fertilizer optimal decision rules for irrigated cotton production in the Southern High Plains of Texas. Results indicate that optimal nitrogen applications critically depend on initial nitrate-nitrogen levels and nitrogen-to-cotton price ratios. Also, the results indicate that single-year optimization leads to suboptimal nitrogen applications, which helps explain long-term cotton yield declines in the Southern High Plains of Texas; but single-year optimization does not significantly impact the net present value of returns of irrigated cotton operations. Key words: dynamic optimization, nitrogen carry-over, production efficiency. The agricultural sector's economic and polit-ical environment coupled with producers ' in-ability to influence either output or input prices highlight the importance of input use efficiency in production as a key component for profit-ability and survival. In this study, efficiency in irrigated cotton production stemming from optimal nitrogen fertilizer applications is ad-dressed. The primary objective of this study is to empirically derive and evaluate nitrogen fer-tilizer optimal decision rules for irrigated cot-ton in the Southern High Plains of Texas. In particular, a dynamic optimization model of nitrogen utilization which introduces an in-tertemporal nitrate-nitrogen carry-over func