Irrigation, water flows and impacts to farm-level economics in the Assiniboine Delta Aquifer

Abstract

As populations increase, human, municipal, industrial and agricultural demands on water increase. It is imperative that legislation, management plans and efficient allocation plans be prepared that satisfy the needs of all stakeholders. Manitoba has long been a province with abundant fresh water resources. Only recently have the demands of multiple stakeholder groups put pressure on the available water, particularly in the Assiniboine Delta Aquifer (ADA) area. Potato growers in the ADA rely on the water in the aquifer as a source of irrigation water. Demands of local processors have increased the demand for irrigated potato acres in the area. The current water allocation rules limit the amount of available water to be used for irrigation, despite the large potential economic benefits of irrigated potatoes. This research examines three types of analyses to study the economic impact of water for irrigated potatoes in the ADA area: a simulation of the water balance in the ADA; a simulation of the water-yield-revenue relationship; and an on-farm capital, financial and economic valuation analysis. The combination of these three analyses provides insight into the possible availability of water for irrgation in the ADA and the economic value of the irrigated potato acres. Results of the water balance simulation suggest that the ADA has excess water capacity in normal and wet years that could be allocated to irrigators. In dry years, the allocation needs to be carefully managed, but the down-draw of the aquifer is minimal and rebounds quickly. Measured as EBITDA, the economic potential of the existing irrigated acres EBITDA ranges between 10 and 38 million dollars, and on-farm benifit-cost ratios and IRR confirm that potato farming is an excellent agricultural investment.