Economic Analysis of Beneficial Water Management Practices in Ontario and Quebec - PowerPoint Presentation

1. Economic Analysis of Beneficial Water Management Practices in Ontario and QuebecMariela Mendoza Marmanilo&Suren KulshreshthaMcGill University Symposium, September 29th 2021

2. Need for the StudyWater availability is predicted to be under pressure partly through climate change as well as from increased competition for other usersNeed for water management cannot be overemphasizedBeneficial management practices have been developed for water table managementObvious question I would the producer adopt such BMPsPrevious studies have suggested that economic returns from such adoption is very importantThis study was undertaken to analyze economic returns from adoping BMP in Ontario and Quebec.Presentation made at the Mitigating Agricultural Greenhouse Gases and Increasing Carbon Sequestration in a Circular Economy; McGill University, August 27th 20212

3. Objectives of the Study1. Estimate the economic desirability of adopting selected BMP considering the direct benefits and costs that could have an effect on the producers; and,  2. Examine the robustness of the results on economic desirability of the selected BMP by simulating these outcomes under changes in various factors that would affect the economics of the BMPs and as possible measures that influence its adoption. Presentation made at the Mitigating Agricultural Greenhouse Gases and Increasing Carbon Sequestration in a Circular Economy; McGill University, August 27th 20213

4. Scope of the studyThe study aims to evaluate the economic effect of adopting BMPs on the farm-level at two locations in Quebec -- Saint Emmanuel and Saint-Patrice de Sherrington, and two in Ontario – Harrow and Holland Marsh. Presentation made at the Mitigating Agricultural Greenhouse Gases and Increasing Carbon Sequestration in a Circular Economy; McGill University, August 27th 20214

5. Map showing location of study sitesPresentation made at the Mitigating Agricultural Greenhouse Gases and Increasing Carbon Sequestration in a Circular Economy; McGill University, August 27th 20215

6. Study BMPsStudy SiteCrop RotationBase TechnologySelected BMP TechnologySt. Emmanuel (Quebec)Corn-Soybean(5-year cycle: CCCCS)Subsurface DrainageControlled Drainage with SubirrigationHarrow (Ontario)Corn-Soybean(2-year cycle: CS)Subsurface DrainageControlled Drainage with SubirrigationSherrington (Quebec)Carrot-Onion (Intercropping)No IrrigationHand Moved Sprinkler IrrigationHolland Marsh (Ontario)Carrot-Onion(3-year cycle: CCO /4-year cycle: CCCO )Subsurface DrainageControlled DrainagePresentation made at the Mitigating Agricultural Greenhouse Gases and Increasing Carbon Sequestration in a Circular Economy; McGill University, August 27th 20216

7. Analytical FrameworkFinancial analysis from producers accounting perspectiveThree economic indictors were uses:1. Net present value (NPV)2. Benefit-Cost Ratio (BCR)3. Pay Back Period (PBP)Presentation made at the Mitigating Agricultural Greenhouse Gases and Increasing Carbon Sequestration in a Circular Economy; McGill University, August 27th 20217

8. Results for St. Emmanuel– Corn - SoybeanIndicatorBase Technology (Subsurface Drainage)BMP Technology (Controlled Drainage with Subirrigation)Net Present Value at r=8.78% ($/acre)64104Benefit-Cost Ratio (gain for every $1 spent/acre)1.0091.014Pay-back Period (years)19.319.2Presentation made at the Mitigating Agricultural Greenhouse Gases and Increasing Carbon Sequestration in a Circular Economy; McGill University, August 27th 20218

9. Results for Harrow: Corn - SoybeanIndicatorBase Technology (Subsurface Drainage)BMP Technology (Controlled Drainage with Subirrigation)Net Present Value at r=8.78% ($/acre)1038Benefit-Cost Ratio (gain for every $1 spent/acre)1.001.01Pay-back Period (years)19.919.8Presentation made at the Mitigating Agricultural Greenhouse Gases and Increasing Carbon Sequestration in a Circular Economy; McGill University, August 27th 20219

10. Results for Sherrington : Carrot-OnionsIndicatorBase Technology (No Irrigation)BMP (Hand Moved Sprinkler Irrigation)Net Present Value at r=8.78% ($/acre)57,93062,354Benefit-Cost Ratio (gain for every $1 spent/acre)2.22.1Pay-back Period (years)01.2Presentation made at the Mitigating Agricultural Greenhouse Gases and Increasing Carbon Sequestration in a Circular Economy; McGill University, August 27th 202110

11. Results for Holland Marsh: Carrot - OnionsIndicatorBase Technology (Subsurface Drainage)BMP (Controlled Drainage)Net Present Value r=8.78% ($/acre)11,98416,147Benefit-Cost Ratio (gain for every $1 spent/acre)1.51.6Pay-back Period (year)0.90.7Presentation made at the Mitigating Agricultural Greenhouse Gases and Increasing Carbon Sequestration in a Circular Economy; McGill University, August 27th 202111

12. Conclusions1. Selected BMP Technology for each of the four case studied was a more desirable alternative when compared to the respective Base Technology. 2. More attractive in vegetable production than grain production3. For the grain production sites (St. Emmanuel and Harrow), pay back period is time to recover is longer, as against for the vegetable production sites (Sherrington and Holland Marsh) this period is very short, which makes them even more attractive. 4. Under various type so sensitivity analysis, the superiority of BMP does not changePresentation made at the Mitigating Agricultural Greenhouse Gases and Increasing Carbon Sequestration in a Circular Economy; McGill University, August 27th 202112

13. Thank you for your attentionPresentation made at the Mitigating Agricultural Greenhouse Gases and Increasing Carbon Sequestration in a Circular Economy; McGill University, August 27th 202113