Dr. Stephen H. Amosson Regents Fellow, Professor and Extension Economist

1. Dr. Stephen H. Amosson Regents Fellow, Professor and Extension Economist

2. Presentation Outline The Trilogy • The Impact of Agribusiness in the High Plains Trade Area • The Economic Value of Irrigation in the Southern High Plains of Texas • The Reality Check

4. Study Region Texas Water Planning Areas Figure 1. Texas High Plains study area. Source: Texas Water Development Board

5. DID YOU KNOW… If the 26 county trade area was a state…

6. #2 in fed cattle marketed just behind Kansas #11 among all states in market value of all agricultural products sold #12 among all states in swine production after having virtually no hogs in 2000 #13 in wheat production #15 in production of each of the following commodities: corn, cotton, sorghum and dairy …it would rank:

15. Agricultural Manufacturing Sector, High Plains Area, 2008

16. Public Sector Not Accounted For Texas AgriLife Extension Service Texas AgriLife Research West Texas A & M University USDA-AMS Farm Service Agency National Resource and Conservation Service Parks and Recreation Texas Veterinary Medical Diagnostic Laboratory Clarendon Community College Others

17. Significance of the FindingsTexas High Plains Trade Area • Agricultural Sales • 3.7 billion value added sales • 6.5 billion regional level impact • 7.2 billion state level impact • Importance of Agricultural Production • Percentage of Texas Production • 74% of fed beef • 93.7% of hogs • 24.0% of dairy cows • 52.2% of corn • 52.7% of wheat Trade Area Would Rank in Top 15 States In 8 categories including 11th in market value

18. Significance of the FindingsTexas High Plains Trade Area • Private Sector • 53,263 Employees with a 1.1 billion dollar payroll • The Impact of Agricultural is Underestimated Because… • No public sector employment is accounted for Neither is the impact of 14,811 Farm and Ranch Operators

19. The Economic Value of Irrigation in the Southern High Plains of Texas

20. Introduction • Agricultural water use is an issue • 93% of total water use in the Texas Panhandle Region • Economy of the Great Plains depends on it • Aquifer withdrawals continue to exceed the recharge rate

21. Introduction • Switch to dryland is inevitable • Implications for switch include change in land use and crop production • Impacts to the economy • Policymakers need to understand these impacts

22. Water Policy History (brief) • Rule of capture • English Common Law • Modified version • Prevent waste • Prevent subsidence • Prevent harmful use • Texas Legislature still reserves right to manage ground water use

23. Water Policy History (brief) • Management of groundwater is handled locally • Groundwater Management Areas (GMAs) • Groundwater Conservation Districts (GCDs) • 2005, GMAs required to develop desired future conditions (DFCs) • GCDs create plans to meet DFCs • DFC for Panhandle: 50/50

24. Objective • Estimate the impact of 100% conversion to dryland production on the economy of the Texas Panhandle . • Provide bounds for the effect of changes in water use/availability • Changes in employment • Changes in economic activity • Changes in wealth • Use IMPLAN to make estimate

25. Study Area

26. IMPLAN • Economic input-output model • “IMpact analysis for PLANning” • Determining the response of a region’s economy to a “shock” • Involves specifying a series of expenditures and applying them to the region’s multipliers

27. IMPLAN • Multipliers • Type SAM • Direct Effects – direct final demand changes • Indirect Effects – industries purchasing from industries resulting from direct final demand changes • Induced Effects – expenditures of household income generated by the direct and indirect effects

28. IMPLAN • Measures of economic activity • Industry Output • Value Added • Employment

29. Data and Methods • Crops analyzed • Corn, Cotton, Peanuts, Sorghum and Wheat • Texas AgriLife Extension Budgets • 2008-2010 Average • Change in gross receipts • NASS Acreages • Irrigated

30. ResultsEconomic Output

31. ResultsEmployment

32. Dairies Feedlots Ethanol Swine WATER USE BY CONFINED LIVESTOCK OPERATIONS AND ETHANOL PLANTS IN THE TEXAS HIGH PLAINS

33. Study Region Objectives Identify The Impacts Confined Livestock Operations And Ethanol Plants Are Having On The Ogallala Aquifer In The Texas High Plains. Determine The Potential Impacts Of The Further Expansion Of These Industries. Figure 1. Texas High Plains study area. Source: Texas Water Development Board

34. Water Use by Sector Water Use by Sector Livestock Water Use Irrigation Other ** Fed cattle 93.25% 23% 57% Livestock 1.48% Dairy Swine 13% 7% Steam Electric Municipal 0.84% 2.94% Mining Manufacturing 0.50% 0.99% Figure 7. Texas High Plains water use by sector (O&A water plans). ** Other includes poultry, range beef, equine, sheep and goat, and summer and winter stocker water use estimates. Source: Region A & O 2011 Water Plans

35. Figure 2. Texas High Plains irrigated crop acres by water planning region, 1934-2007. Source: U.S. Census of Agriculture

36. Figure 3. Texas High Plains corn, cotton, sorghum, and wheat irrigated acres, 1973-2008. Source: National Agricultural Statistics Service

37. Impact of Grain Deficit Production On Confined Livestock Operations and Ethanol Plants Effective Water Use Figure 21. Texas High Plains estimated grain imports in volume and as a percentage of total demand to support confined livestock operations and ethanol, 1973-2008.

38. Comparison of Regional Impacts: Ethanol Versus Irrigated Grain Production Table 4. Comparative regional socioeconomic impacts of ethanol versus irrigated crop production with equivalent direct water requirements* * Estimated impacts include direct, indirect, and induced effects.