Economic impacts on irrigated agriculture of water conservation programs in drought

•This study analyzes vulnerability, impacts, and adaptability by irrigation to drought.•It accounts for economic incentives affecting choices on irrigation technology, crop mix, and water sources.•When surface water supplies fall, farmers increase pumping, even when pumping raises production costs.•Conservation program subsidies raise the value of food production but can increase crop water depletions.

SummaryThe need to adapt irrigation patterns to water shortages in the world’s dry regions continues to inspire economically attractive measures to sustain food security and improve farm incomes. Ongoing evidence of climate variability and growing populations amplify the importance of this search. Motivated by recent severe drought in the southwestern United States, this study analyzes vulnerability, impacts, and adaptability by irrigation technology in a sub-basin of North America’s Rio Grande. The study accounts for economic incentives affecting choices on irrigation technology, crop mix, and water source in the face of water conservation subsidies under various levels of surface water shortage. Findings show that when surface water supplies are reduced, farmers shift to aquifer pumping even when pumping raises the cost of production or reduces yield. An important on-farm drought adaptation mechanism comes by converting from surface irrigation to water conserving irrigation technologies when faced with lower financial costs for conversion. Public subsidies to convert from flood to drip irrigation offset many of the negative impacts of drought on farm income. These subsidies also raise the value of food production, reduce the amount of water applied to crops, but can increase crop water depletions. Our approach for analyzing drought adaptation impacts and adjustment mechanisms can be applied where water shortages loom, food security is important, and water conservation policies are under debate. Results provide insights for the design of adaptation mechanisms for the world’s dry regions for which policymakers need to reduce economic damages from future climate variability and change.