Economics of Cooperative Irrigation District in Oklahoma

Panhandle

Karthik Ramaswamy, PhD studentDepartment of Agricultural Economics

Oklahoma State University

Art Stoecker, Associate ProfessorDepartment of Agricultural Economics

Oklahoma State University

39th Annual Oklahoma Governor’s Water Conference and Research Symposium

06 Dec 2018

Background• In Oklahoma, irrigation accounts for 86 percent of total groundwater

use from Ogallala aquifer (OWRB, 2012)• Water-levels in OPA have been falling steadily by 1 to 3 feet annually• Unfortunately, groundwater recharge in Oklahoma Panhandle area

(OPA) overlying the Ogallala aquifer is almost zero• The major irrigated crops in OPA (Census of Ag, 2012)

corn 106,240 acressorghum 19,450 acreswinter wheat 64,670 acres

• OPA has 2,818 irrigation wells (USGS & OWRB, 2016)• Hydraulic conductivity (K) varies from 25 to 100 feet/day• Range for specific yield (S) ranges between 18-28 percent• Average yield of the performance trials at OPA (OSU Exp. Station)

Corn is 200 bu./ac. with 21 acre-inch → 9.5 bu./inchSorghum is 141 bu./ac. with 8 acre-inch → 17.6 bu./inch

2

Previous StudiesWarren et. al, 2015 (OKWRC report)

• Irrigated corn gives greater net returns than sorghum when well capacities are above 5 GPM per acre

• Irrigated sorghum gives greater net returns than corn if well capacities decline below 5 GPM per acre 3

-$50

$0

$50

$100

$150

$200

5.0 4.2 3.3 2.5 1.7 0.8

$/ac

re

GPM/acre

Pivot Irrigated Corn and Sorghum a 120-acre

Sorghum Corn

Previous StudiesRamaswamy, 2016 (M.S. Thesis, OSU Library)• It is more profitable to follow long-term profit maximizing (LPM)

strategy by replacing irrigated corn with grain sorghum

4

-$100,000$0

$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000$900,000

$1,000,000

0 15 30 45 60

Cum

ulat

ive

NPV

Year

Net Present Value between APM* and LPM

APMLTPM

LPM = $909,461APM = $888,559

*APM is Annual Profit Maximization

Motivation of this Study• In LPM strategy, a producer would use less water and irrigate for

more years than the annual profit maximizing (APM)

• LPM producers will fear that any water saved for the future use will migrate toward and be used by an adjoining APM neighbor

• However, it is expected the proportion of lateral groundwater loss from a contiguous group of LPM producers would be less than from a single LPM producer. 5

05000

1000015000200002500030000

0 10 20 30 40 50 60

acre

-feet

Year

Remaining Water Supply: LPM vs. APM

LTPMAPM

ObjectiveThe overall objective of this research is to determine groundwater migration and observe the benefits of constructing a CID for planning periods of 30 or more years

Specific objectives test hypothesis• To estimate well interference through lateral flows for different sized

groups (1, 4, 9, 16, etc., 640-acre sections) of LPM in a CID surrounded by APM producers

• To quantify the effect of different hydraulic conductivities on the lateral movement of groundwater from each size of CID surrounded by APM producers

• Determine the optimal contiguous size of land area that must be controlled or agreed upon by the producers to follow LPM strategies

6

Methods• Each individual producer (LPM or APM) is assumed to have a

640-acre field with four wellsRepresentative farm

• The APM group chooses crops (grain sorghum or corn) and irrigation levels that give maximum annual profits

• The LPM group chooses same crops and irrigation levels that maximize the net present value (NPV) from the remaining groundwater for the planning horizon

7

A A A A A A A

A A A A A A A

A A LC LE LC A A

A A LE LM LE A A

A A LC LE LC A A

A A A A A A A

A A A A A A A

A A A A

A L L A

A L L A

A A A A

Methods (cont.)

A A A

A L A

A A A

One LPM producer surrounded by 8 APM producersFour LPM producers surrounded by 12 APM producersNine LPM producers surrounded by 40 APM producers

L LPM producers

A APM producers

LM LPM producer in the middle of CID

LC LPM producers in corners of CID

LE LPM producers in edges of CID

A APM producers

8

Methods (cont.)• The hydrology parameters from USGS and OWRB were collected

and entered into the MODLOW model►Hydraulic conductivity 25 feet per day►Specific yield 0.175►Saturated thickness 83 feet (with 35 feet of safety zone)

• The optimal water use for LPM strategy is determined by a multi-period mixed integer programming model

• The APM optimal water use strategy is determined by a recursive linear programming model

Expected Annual Water Use of LPM and APM producers with four wells on a 640 acre for 30 years

Acre-feet per yearGroup 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17-30LPM 461 461 321 185 185 185 185 185 217 238 238 213 209 209 209 230 104

APM 462 462 462 462 457 431 405 352 352 284 206 206 206 206 206 104 104

9

Methods (cont.)• Groundwater interaction analysis are done in MODFLOW for

contiguous land sizes and well locations

For each year • The head values are noted from the MODFLOW

• The amount of groundwater flow from the CID producers to the surrounding APM producers is calculated

For the planning horizon (30 years)• Each size of CIDs lateral flow to the surrounding APM producers is

compared to potential returns if all producers adopted the LPM strategy

10

Principal Findings

202224262830

Hea

d (fe

et)

Year 1028-3026-2824-2622-2420-22

68

1012

Hea

d (fe

et)

Year 30

10-12

8-10

6-8

Four LPM surr. by 12 APM’sOne LPM surr. by 8 APM’s

12141618

Hea

d (fe

et)

Year 2016-18

14-16

12-14

202224262830

Hea

d (fe

et)

Year 1028-3026-2824-2622-2420-22

12141618

Hea

d (fe

et)

Year 20

16-1814-1612-14

68

1012

Hea

d (fe

et)

Year 30

10-128-106-8

Nine LPM surr. by 40 APM’s

12141618

Hea

d (fe

et)

Year 20

16-1814-1612-14

202224262830

Hea

d (fe

et)

Year 1028-3026-2824-2622-2420-22

68

1012

Hea

d (fe

et)

Year 30

10-128-106-8

11

Principal Findings (cont.)

020406080

100120

0 10 20 30

Acre

-feet

Year

One LPM to surr. APM

020406080

100120

0 10 20 30

Acre

-feet

Year

Four LPM to Surr. 12 APM

020406080

100120

0 10 20 30

Acre

-feet

Year

Nine LPM to Surr. APM

CornerEdgeCenter

82 % of GW retained 84 % of GW retained

87 % of GW retained

Amount groundwater (GW) migrated from each LPM producer in CID to surrounding APM producers

12

Principal Findings (cont.)

05

101520253035404550

0 5 10 15 20 25 30

Wat

er T

able

(fee

t)

Year

Water Table Decline Rate: APM vs. LPM vs. CIDs

All LPM9 LPM CID (Center)4 LPM CIDAll APM

13

Research Progress• Maximize the value of the water by satisfying the pumping rates

subject to uniform head stress levels for all the LPM producers in CID

• This can be done using GWM MODFLOW-2000 (Developed by Ahlfed. D, University of Massachusetts, Amherst)

• Determine the CID for other regions of OPA by testingHydraulic conductivity 50, 75, and 100 feet per daySpecific yield 0.12 to 0.22

• Determine the most optimal CID size for OPA, and that will increase the grain production in long-run

Kansas Water Law (Golden and Guerrero, 2017)• The 2012 Kansas Legislature passed Senate Bill 310 making Local

Enhanced Management Areas (LEMAs) a part of Kansas Law.

14

Thank you

ramaswk@okstate.edu(405) 744-9799

“Knowledge that in the future groundwater saved through

conservation will be available to the conserving producers

and should increase conservation benefits”