Investing in Alabama crop irrigation would bring good returnInvesting in Alabama crop irrigation would bring good return
• If the state invested the same percentage in irrigation that was invested in the Mobile County steel mill, the return would be two and a half times that projected for the mill.
November 1, 2012
Expanding crop irrigation would be a good investment for Alabama, even better than automobile plants and other industries that receive the bounty of state incentives, says Dick McNider, Professor Emeritus at the University of Alabama at Huntsville and leader of the Alabama Irrigation Initiative.
“Should we provide incentives to help expand irrigation? There are some views that we should just let the free market do everything, and let the chips fall where they may, but we don’t live in a perfect world,” says McNider.
In the past 10 to 15 years, he says, Alabama has done a lot to attract industry to the state. “All our automotive plants were brought in with state incentives, with the most recent being the ThyssenKrupp steel mill in Mobile County. At least with that one, all of the incentives were out on the table, and the state made about an $811 million investment.
“The construction of that steel mill cost about $1.9 billion. The cost of putting 50 percent of our current land in irrigation would be about $860 million,” says McNider.
If the state invested the same percentage that was invested in the steel mill, he says, the return would be two and a half times that projected for the mill, he says.
“Over the past 50 years, Alabama has lost a lot of row-crop agriculture to CRP set-asides or timberland. We’ve lost that turnover of dollars in our rural economies, so there are incentives for the state. We need to do something to stem the flow of lost agriculture in the state. It is important for a robust economy to bring more irrigation into the state,” he says.
(You might also be interested in Alabama has potential to increase irrigated cropland, but barriers remain. And increasing irrigated acres in Alabama isn’t going to be easy. To see details on more of the obstacles standing in the way, see Obstacles still hinder irrigation in Alabama).
The Alabama Irrigation Initiative concluded that there were four major barriers to expanding irrigation in the state, says McNider, and he has added a fifth one.
“The first barrier is the lack of access to water. Under the riparian system we have for surface water, you have to own the land next to the spring to legally use that water. The other thing is the lack of cheap groundwater.”
The second barrier, he says, is a lack of capital. “In an agricultural system where people have been doing rain-fed farming, there hasn’t been much of an opportunity to build up a lot of capital to invest in irrigation. A lot of farms go back several generations, and it’s almost like they’re literally betting the farm for the next generation if they invest in irrigation, so they’re risk-adverse to making that investment.”
The third thing, says McNider, is that there’s a lot of rented land in Alabama, and it’s difficult to make an investment if you’re not sure what the length of your lease will be.
“Another barrier is the age of farmers. When you talk about making an investment in irrigation that’ll take 15 to 20 years to pay back, a lot of farmers are getting to the age of not wanting to make the long-term investment.”
A fifth barrier is that there’s so little irrigation in the state, farmers don’t have a lot of experience with the infrastructure, he says. “It’s intimidating to see the size and scope of some larger irrigation systems, so I think the lack of experience has kept some farmers from getting into irrigation.”
Programs that have been enacted to expand irrigation in Alabama in a sustainable manner include the Agricultural Water Enhancement Program (AWEP) under the 2008 farm bill and the Alabama Irrigation Tax Incentive bill passed this year by the state legislature.
“There are some things we might have to fine-tune on that latest legislation, but it is the first step in getting some incentives for irrigation.”
The irrigation incentive provides a state income tax credit of 20 percent of the costs of the purchase and installation of irrigation systems. The bill also allows the tax credit on the development of irrigation reservoirs and water wells, in addition to the conversion of fuel-powered systems to electric power. The one-time credit cannot exceed $10,000 per taxpayer, and it must be taken in the year in which the equipment or reservoirs are placed into service.
Is there more Alabama can do, asks McNider, in light of the fact that the governor has stated there is no more money for making investments in industrial incentives?
“We can try to support language in the federal farm bill that provides funding for irrigation infrastructure in the Eastern U.S. The West has been the beneficiary of billions of federal dollars for water infrastructure. The Southeast needs cost-share support for on-farm reservoirs.
“Also, we can make better use of our groundwater, though we don’t have some of the aquifers that are large enough to drive center pivots. But maybe we can do things like using small wells and a reservoir to make better use of the groundwater that we do have.”
Even if the state doesn’t have money to make a direct investment in irrigation, maybe it can provide loan guarantees and/or tax incentives to farmers who borrow money for irrigation impoundments and associated irrigation infrastructure.
“Loan guarantees may be a near no-cost solution for the state. It would allow farmers to expand irrigation without risking their land. In the end, irrigated land can sustain a higher property tax rate.”
The state also can define water policy that allows conveyance across property boundaries (to non-riparian land) but restricts water withdrawals to times when streams have adequate water, says McNider.
“Access to water has been a major hindrance to expanded irrigation,” he says. “Allowing water to be moved to non-riparian land is key to more farmers having access to water. However, such access requires that limits on withdrawals are in place to protect the downstream user.”
For this to occur, he says, Alabama needs a comprehensive water management tool. “Under the Alabama Irrigation Initiative and follow-on NSF/USDA grant, we have developed, in partnership with the U.S Forest Service, application of the Water Supply Stress Index (WASSI) model to Alabama.
The model, he explains, computes the demand (municipal, irrigation, industrial withdrawals) and the supply (rainfall run-off).
“In the Southeast, we’re using a small amount of the water that’s available. In the West, they’re using almost all of their available water. In Alabama, our streams and watersheds have plenty of available water 90 percent of the time. We can open up the use of this water by pumping from the Tennessee River or the Alabama River.
“If we can have a system in place that would check when the sources are stressed, that would be the only time withdrawals would be restricted. People worry about the cumulative effective of adding large amounts of irrigation, but if we have these management tools, we could actually see when these watersheds are stressed.”
The Alabama Irrigation Initiative has asked state legislatures if it can form a Scientific and Economic Advisory Committee to develop a framework for legislation for the 2013 Legislative Session which would define appropriate economic incentives for expanding irrigation in the state, address water transfer, and assess limits on withdrawal.
The committee, says McNider, would be made up of senior members of the Alabama Irrigation Initiative, agricultural representatives appointed by Alabama Farmers Federation, environmental representatives, and other members.
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