Irrigation Management Strategies for Cotton Production in the Texas Panhandle

The reduction in the availability of irrigation water and the increase in pumping costs resulting from the decline in the Ogallala Aquifer make management decisions more critical for the survival of the farm firm and the success of the agricultural sector in the Texas Panhandle. The increased profitability from cotton is a major reason for the expansion of cotton production in the area. Cotton yield-water response functions are estimated. The response functions are then transferred into value functions and combined with an irrigation energy cost function to determine the profit maximizing irrigation management strategy. The estimation of response functions based on the availability of water in the Ogallala aquifer provides insight into the different management decisions that are faced by the area producers. The analysis for natural gas prices between $6.50 and $11 per mcf and cotton between $0.35 and $0.70 per pound indicate that the amount of water needed to apply increases as the price of cotton increases. Conversely, for a fixed price of cotton the optimal water application rate declines as the price of natural gas increases.