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Master of Agribusiness

Using Average Net Returns and Risk Measures to Compare Irrigation Management Strategies

Frances Bretz, Algona, Iowa, defended her thesis, “Using Average Net Returns and Risk Measures to Compare Irrigation Management Strategies” on April 28, 2017. She is the Office Manager at Integrative Services. Bretz graduated from Kansas State University in December 2017 with a Master of Agribusiness (MAB) degree.

The Ogallala Aquifer, an underground water storage reservoir providing water for crop irrigation in parts of western Kansas and other states, has experienced a decrease in saturated thickness in recent years as the reservoir is depleted. This results in a reduction in the rate of water that can be extracted, decreasing irrigation well capacity. Limited well capacities introduce risk in agricultural production as a consistent source of irrigation water may not be present. By developing a method to assist producers in comparing alternative irrigation management strategies, risk can be better managed.

“Management strategies include different combinations of corn and wheat production with full irrigation, moderate irrigation, deficit irrigation and dryland production. The three risk measures used were Value at Risk (VaR), expected shortfall and standard deviation,” Bretz said.

The model created by Bretz provides information about irrigation risk management by simulating average net returns for 172 different irrigation strategies across 30 years of historical weather. She found that estimating risk measures to evaluate the optimal management strategy can better help producers than by evaluating net returns alone.

Dr. Nathan Hendricks, Associate Professor and Bretz’s thesis advisor, said, “Fran’s thesis makes an important contribution in creating a tool that farmers can use to assess the riskiness of alternative irrigation strategies under limited well capacities.”

The full thesis publication can be found online on Kansas State University’s Research Exchange at http://hdl.handle.net/2097/35548.