A linear programming model was utilized to simulate a 20 year (1979-1998) crop production and irrigation water utilization pattern in the Estancia Basin of New Mexico under four alternative energy price projections–base low medium and high.

Under the simulation approximately 31,300 acres of land would be farmed in 1978, rising to 46,300 acres in 1998 with 94 percent of the total being flood irrigated and the balance irrigated with sprinklers. Alfalfa accounted for 40 percent of the irrigated cropland, corn for silage 25 percent, corn for grain 11 percent, wheat 10 percent, pinto beans 7 percent, and potatoes 5 percent. However, under the high energy price alternative, irrigated cropped agriculture would cease after 1996.

Net returns to land and risk varied widely among the four energy price projections ranging from an increase of 158 percent in the base alternative from 1978 to 1998 to a 90 percent reduction in net returns in the high energy price alternative through 1996 and a 100 percent reduction by 1998. The reduction in net returns from 1978 to 1998 for the low energy price alternative was about 11 percent and about 58 percent for the medium energy price alternative. The reduction in net returns was due primarily to the rapid escalation of diesel fuel prices. The diesel fuel cost for the high alternative was expected to increase 469 percent, 375 percent for the medium alternative, and about 220 percent for the low alternative over present costs.

The returns to risk, after imposing a charge for the use of irrigated cropland valued at $1,000 per acre, was a negative $37 per acre in the base year of 1978. The negative returns to risk became even greater under the low ($60) and medium ($80) energy price alternatives in 1998, and high ($96) in 1996. Under the base price alternative, the net return to risk was estimated at a negative $33 per acre.

The amount of irrigation water pumped in the Estancia Basin would increase 2.4 percent per year over the 20 year period for the energy price alternatives. The total declines in the water tables were estimated to be 26.5 feet (1.3 feet per year). In addition, there were changes in energy sources for pumping irrigation water, irrigation pumping plant efficiencies and energy costs for pumping irrigation water among the alternative energy Price Projections.The annual labor requirements and cost increased in relation to the increase in acreage, as did the annual operating capital requirements.

Project No. WRRI 3109-410