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Irrigated agriculture is becoming challenging to sustain with diminishing water levels worldwide and increasing population. Groundwater is a nonrenewable resource throughout much of the world, and in instances when it is renewable, it is often a time-intensive rate of recharge. Producers of the High Plains region within Texas are facing this growing concern of groundwater depletion of the Ogallala Aquifer. Producers are faced to make changes in production decisions to remain profitable as their well capacities diminish. A two-stage integrated optimization model was developed to evaluate changes in crop mix, water availability, and profits for producers within Hartley County, Texas.

An integrated model was developed to incorporate changing agronomic, hydrogeological, and economic components, then further evaluate how these changing components influence both the resulting output and the producers’ decision. The model was developed using a general non-linear optimization package called ‘Rsolnp’ in RStudio (RStudio, 2020). The model compared the results of seven different scenarios to the baseline scenario over a 30-year study period. The scenarios would include water restriction scenarios, acreage restriction scenarios, an increase and decrease in fuel price scenarios, and an increase and decrease in commodity price scenarios.

The model was broken into two stages; stage one is where producers decide to make planting decisions to maximize profit based on the expectation of receiving the average annual precipitation for the specific crop and the availability of water they can apply to the planted crop that is determined by their well capacity. In stage two, the crop acreage is already planted based on decisions in stage one; producers will now decide how to actually allocate their water based on the received variable precipitation. Results of profits were compared between stages one and two, which calculates profits producers would expect to see as compared to the profits they may actually receive.

Results of the scenarios give the comparison to producers and policymakers on what actions are needed to take in order to stay profitable. All scenarios suggest that there will be a decline in water availability throughout the 30 years. In stage two, a 50 percent acreage reduction brought the producer the most stable profit with a standard deviation of $6,362 per year. To conclude, both policymakers and producers should include the use of a two-stage modeling technique to evaluate their management decisions and potential applications of policies. The two-stage modeling technique represents producers' actual behavior and operating environment. This modeling technique gives better intel to producers on how to expect profits to vary year to year so they can further prepare and mitigate their financial risks. It also illustrates to policymakers how the changing precipitation conditions will impact groundwater availability from year to year.



Optimization, Water Policy, Texas, Groundwater, Ogallala Aquifer


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