Project Summaries

06-825  Project Manager: J. M. Reeves


George B. Frisvold, University of Arizona

This study seeks to address three research questions. First, what are the "lost resource costs" of cotton acreage abandonment (planting acreage that is not harvested)? Inputs used to plant cotton not subsequently harvested are lost to society. Even if growers have insurance coverage for losses, the inputs devoted to planting are lost to society. This represents a cost of lost resources. Second, how do weather extremes affect abandonment? Third, how do different types of weather extremes contribute to crop insurance indemnities in Arizona and New Mexico?

This study presented results of a simple procedure to derive a conservative estimate of the lost resource costs of upland acreage abandonment. Widespread crop failures from drought or other weather extremes can threaten the long-term sustainability of cotton operations. The lost resource costs of cotton acreage abandonment have exceeded $200 million in seven of the last eleven years. Abandonment costs peaked at nearly $900 million in 2011. Based on regression analysis, it was found that a small number of weather extremes variables are highly significant predictors of a county's abandoned acres as a share of total planted acres. Dryer than normal conditions had a strong positive effect on abandonment, while wetter than normal years had no statistically significant effect. Access to irrigation greatly mitigates the effects of drought on abandonment. Risk Management Agency data for Arizona and New Mexico suggests that cold and excessive moisture were major contributors to crop insurance indemnities over the last 20 years. These factors combined appeared more important than heat and drought combined in both states, perhaps because cotton in both states is irrigated. These results are similar to the study for California, where excessive moisture was also a main contributor to crop insurance indemnities. Again, California agriculture has a high proportion of acres irrigated. While irrigation can mitigate effects of drought, this depends on reliable irrigation supplies. Irrigation failures accounted for about one fifth of indemnities pay to cotton growers for losses in Arizona and California. While cotton growers cannot control the weather, it may be possible to reduce losses from irrigation failures in the future.


Project Year: 2012

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