Optimal Water Allocation under Deficit Irrigation in the Context of Colorado Water Law

AbstractThe common belief is that there are opportunities in the agricultural sector to use less irrigation water and thus make saved water available for municipal and industrial uses. The key is for farmers to maximize farm profit through optimizing water allocation between on-farm production and off-farm leases. A model to optimize water allocation for a single farm and crop using crop water production functions and the concept of deficit irrigation is presented in this paper. Using this model, optimal water allocation was determined based on maize and sunflower water productivity data collected during 2008–2011 growing seasons in eastern Colorado. According to the region’s water leasing and yield prices during 2010–2016, deficit irrigation does improve farm income at moderate to high leasing prices. When crop prices are low relative to leasing prices, leasing all the available water and fallowing or planting unirrigated crops provides the highest income. The model can define the crop and water leasing prices for which deficit irrigation is worthwhile.