Technological response to natural resource depletion : a model of crop agriculture on the Texas High Plains

Typescript (photocopy).Crop production on the Texas High Plains is constrained by limited rainfall making irrigation important. Presently, 50% of the cropland is irrigated, mainly from the Ogallala Aquifer, which as a recharge rate near zero, and is being depleted. Future crop production is dependent on the technology used, as well as the resources available. Because water is a major limiting resource, technologies that increase plant available water are the focus of this study. Two levels of analysis were included. The first, a farm level analysis based upon representative counties showed response similarities and differences given resource endowments, technological options and price situations. Part of the analysis considers the impact of annual groundwater withdrawal constraints on discounted net present value for a forty year planning horizon. Lower discount rates, better commodity prices, and more advanced technology increased net revenue but did not change the optimum annual withdrawal limit. The other part of the farm firm analysis covers expected costs, returns and cropping patterns for a single period. The value of production is 64% to 85% higher for normal prices versus low prices, while net returns are from 8 to 30 times higher. Comparing across representative counties, with prices, technology and groundwater situations held constant, the value of production varied more than $150 per acre, but net returns changed very little. The value of production increased 17% with advanced technology, but net revenue more than doubled. The second level of analysis, a regional analysis, addressed expected changes in cropland use, groundwater pumpage, production levels, input demand, and farm income over the next forty years, under select technology and price assumptions. Water availability and hence use, drops over time, reducing irrigated cropland, gross returns and net revenue. The intensity of crop production declines and the mix of crops changes, reducing purchased input demand and lowering regional farm income. Advanced technology enhances the value of the groundwater resource, increasing water use, especially in the later periods of the time horizon. Nonetheless, over the whole 40 years, technologies which improve dryland, as well as irrigated, crop production, have a greater impact than advanced irrigation technology