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Published by SudharsananPRS
Irrigation Manual Part 11
Irrigation Manual Part 11

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Categories:Types, Research
Published by: SudharsananPRS on Jun 06, 2013
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Part 652Irrigation Guide
Economic EvaluationsChapter 11
11–25(210-vi-NEH, September 1997)
 
Chapter 11Economic Evaluations
Contents:
11–i
652.1100Forward111652.1101General111652.1102Economics of installing a new irrigation system112
(a)Benefit analysis...........................................................................................11–2(b)Cost analysis................................................................................................11–4(c)Benefit-to-cost analysis............................................................................11–11
652.1103Economics of operating an existing system1112
(a)Benefit analysis.........................................................................................11–12(b)Operating costs.........................................................................................11–13(c)Benefit-to-cost analysis............................................................................11–14
652.1104Maximizing net returns1115
(a)Marginal cost and marginal return.........................................................11–15(b)Water-yield relationships.........................................................................11–15(c)Production function..................................................................................11–17
652.1105Pipeline installation and pumping costs evaluation11–20652.1106State supplement1124TablesTable 111
Present value factors for single payment117
Table 11–2
Cost factors (amortization)117
Table 11–3
Developing water use-yield relationship1116
Table 11–4
Marginal cost - marginal return relationships11–18
Table 11–5
 Typical energy consumption11–24
Table 11–6
Equivalent energy annual cost escalation factors11–24
 
Part 652Irrigation Guide
Economic EvaluationsChapter 11
1126(210-vi-NEH, September 1997)
FiguresFigure 111
Product yield vs. water applied—irrigated corn11–17
ExhibitsExhibit 111
Gross benefits worksheet113
Exhibit 11–2
Ownership (or fixed) costs115
Exhibit 11–3
Increased ownership cost worksheet119
Exhibit 11–4
Increased operating costs worksheet1110
Exhibit 11–5
Feasibility worksheet1111
Exhibit 11–6
Gross benefits worksheet1112
Exhibit 11–7
Increased operating costs worksheet1113
Exhibit 11–8
Benefit-to-cost analysis1114
Exhibit 11–9
Format for developing a partial budget1119
ExamplesExample 11–1
Pipeline installation and pumping costs evaluation11–21
Example 11–2
Calculating annual energy savings1123
 
11–ii
 
Part 652Irrigation Guide
Economic EvaluationsChapter 11
11–1(210-vi-NEH, September 1997)
 
Chapter 11Economic Evaluations
652.1100Forward
 The material in chapter 11 is intended to be self helpinstructional material and reinforce formal trainingactivities on the economics of irrigation. It is intendedprimarily to illustrate for field office personnel the useof economic principles and evaluation procedures. These principles and procedures should be helpfulwhen working with land users analyzing the econom-ics of irrigation. Additional help is available fromtechnical specialists. For an expanded discussion of economic evaluations, see The Handbook of Econom-ics for Conservation, Natural Resources ConservationService (NRCS), April 1992, and Farm ManagementCourse Notebook, NRCS and America Society of FarmManagers and Appraisers, 1994.
652.1101General
Decisions are made daily whether to purchase an itemor which item to purchase. Economics is the processof deciding where and how we spend our moneyranging from pennies to thousands of dollars. There-fore, what factors do we analyze in deciding how tospend our money? Normally we compare the benefitsof the purchase or investment to its cost. Someoneconsidering the purchase of a new car might see bettergas mileage and fewer repairs as benefits. Costs mightinclude higher car payments and higher insurancepremiums. Someone wanting a new computer mightbe comparing benefits that a new computer would givethem in business and at home to the cost of giving upother activities or items currently enjoyed.Farmers, when deciding whether to purchase anirrigation system, go through much the same thoughtprocess. They may ask, “Should I continue my drylandfarming operation or should I irrigate? If I decide toirrigate, how much water should be applied to get thegreatest profit? Will the greatest profit be realized atthe point of maximum yield? Will the increase in yieldmore than pay the increase in costs?” These questions can be asked when contemplatingwhether to replace an existing irrigation system. Whatare the proposed changes? What are the costs? Whatare the benefits? Is there a better alternative? Forexample:Improved water management with the existingirrigation system, orImproved precipitation storage in the soilresulting from improved soil condition, bettercrop residue use, changed (usually reduced)number and type of tillage operations, perform-ing farming operations on the contour, orA combination of 1 and 2. The need for change should be based on using theexisting irrigation system along with proper water,soil, and plant management. Too often a poorly man-aged surface irrigation system is compared to a prop-erly managed sprinkler or micro irrigation system.Assumed level of management can be guided by ob-serving the irrigation decisionmakers current irriga-tion water management and other farm management

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