1. Water Trends in Agriculture: Implications for Farms, Cooperatives and Communities James Pritchett Agricultural and Resource Economics Colorado State University James.Pritchett@ColoState.edu 13 th Annual Farmers Cooperatives Conference Cooperatives, Agriculture & Water Resource Policies Broomfield, CO

2. Overview Slide Farm Economics: What does limited water mean to the farm business? Regional Economics: What does irrigated agriculture mean to rural communities?

3. Reductions in Irrigated Ag Urbanization Declining Aquifers Institutions

4. Profit and Water: General Manager Approach Reduced Water Challenges Scale of Operation Turns (asset efficiency) Earns (cost efficiency) Financial Limitations Cash Flow Balance Sheet Operational Risk Reduced Water Opportunities Opportunistic Farming System Approaches “Spreading” Water Time Specific Management Transition to Perennials Technology Adoption Water as a Crop Available Water 25 inches $ per ac.

5. Irrigated Ag in Colorado 2007 Colorado Agriculture Receipts: $6.3 billion 2007 Colorado Crop Receipts: $2.0 billion 2007 Irrigated Crops Receipts: $1.4 billion (estimated)

6. Economic Activity per Acre Region a Farm Gate Receipts Relative to Regional Sales a Economic Activity Generated per Acre of Irrigated Cropland Representative Cropping Pattern Arkansas31 %$428Forages Republican37 %$678Continuous Corn - Alfalfa Rio Grande48 %$1,127Potatoes - Barley South Platte2 %$690Corn – Alfalfa – Sugar Beets a Includes all production agriculture.

7. Economic Activity: Irrigated Agriculture Direct Activity Crop Sales (Gross Revenues) Indirect Effects Fertilizer, Seed, Chemical Sales (but margins only) Transportation Real Estate Services Ag Consultants Induced Effects Wages Spent with Local Businesses When is generated economic activity high? High value crops sold outside the region. Revenues spent on locally produced inputs. Local support industries use local labor and inputs. RegionEconomic Activity ($/ac) Arkansas$428 Republican$678 Rio Grande$1,127 South Platte$690

8. Western Household Preferences Short Term Scarcity

9. Western Household Preferences Long Term Needs

10. Innovative Approaches Farm Conservation of CU Deficit Irrigation and Dryland Rotation Innovative Institutions Water Cooperative ‘Super Ditch’ Shared Infrastructure and Institutions ‘One Stop Shopping’ for Projects Economic Development Zones Water Basin Approaches

11. Water in Agriculture: Where to go from here? Irrigated agriculture is an engine of economic activity. Income is largest for exported goods, local input use. If acres transition, what alternatives exist? What investments might be created? Water Transfers Might Take Many Forms Buy Back Leasing, Interruptible Supply Shared Infrastructure and Institutions Continued Support for Flexibility Encouraging ‘Good’ Transfers