Economics of Salinity Effects from Irrigated Cotton: An Efficiency Analysis

Abstract

Using an environmentally adjusted performance measurement the study evaluates the tradeoffs between the benefits derived from irrigated cotton enterprises and its associated environmental damages. Deep drainage, which adds to the aquifer recharge and thereby contributes to salinization, is treated as an environmentally detrimental output. The analysis includes data collected from a sample of 53 observations in the Mooki Catchment located in northern New South Wales, Australia. Environmentally adjusted efficiency of cotton enterprises is estimated using the environmental performance index (EPI) and relative efficiency rankings are determined for each of the considered cotton areas in the catchment. The findings reveal that environmentally adjusted efficiency of irrigated cotton is within an acceptable range (more than 60% of observations have an EPI efficiency score of greater than 5). The efficiency variation among the observations based on hydrological response units (HRUs) can be attributed to a number of reasons including physical factors (i.e., soil quality, topography), type of irrigation technology used, and other environmental factors. For instance, the overall efficiencies of downstream HRUs are higher than that of upstream HRUs. Therefore, biophysical characteristics of an area need to be incorporated in the efficiency model. With the identification of the most and least efficient cotton irrigation areas in the region, policymakers can construct a relative ranking to best determine policy directions in order to take a more targeted approach towards salinity mitigation.