Methodology for ecological and economic assessment of modern irrigation technologies in agriculture

As a result of implementing irrigation planning systems in agricultural production, the following are ensured:

• optimization of soil water and nutrient regimes and microclimate based on the application of sprinkler irrigation technology, ensuring an increase in yield of no less than 20%;
• reduction of irrigation water losses due to surface runoff and infiltration by up to 20%, reduction of the leaching of chemicals and nutrients from the soil into groundwater and natural water sources through the development of new technical means and irrigation technologies, irrigation management methods, and design and quality assessment of the technological process;
• savings in energy and material resources by 15-20%;
• increase in labor productivity by no less than 50%.

Economic efficiency of new technologies and equipment is determined by their impact on improving the final indicators of agricultural production, primarily on profit growth due to increased crop yield and livestock productivity, improved product quality, reduced labor costs, and lower production costs.

The ecological and economic assessment of irrigation efficiency is carried out in accordance with regulatory and methodological documents (Methodological recommendations for assessing the efficiency of investment projects (2nd ed. Official publ. - M.: Ekonomika, 2000) and Methodological recommendations for assessing the efficiency of investment projects for agricultural land reclamation (RD-APKZ.00.01.003-03), the main provisions of which comply with international standards, which provides a methodological basis for the feasibility study of specific projects.

As an integral indicator for assessing economic efficiency, the net present value growth is used, determined on the basis of discounting cash flows (operational, investment, financial), and as an auxiliary one - the payback period of capital investments.

The efficiency assessments are based on the following main principles applicable to any types of innovation projects in the field of land reclamation, regardless of their technical, technological, financial, sectoral, or regional characteristics:

• the feasibility of irrigation technologies is assessed by the possibility of implementing its technical, resource, environmental, and financial support;
• consideration of the results of irrigation technologies throughout their entire life cycle (calculation period) - from the beginning of implementation to completion;
• cost assessment of all types of costs and results based on modeling cash inflows and outflows associated with irrigation technologies for the calculation period;
• comparability of conditions for comparing different irrigation technology options;
• account for the influence of the time factor. When assessing efficiency, possible changes over time must be taken into account: the area and yield of irrigated lands, economic conditions, and the socio-economic situation; different service lives of technical means and equipment, the need for capital repair investments during the calculation period; and the inequality of costs and results occurring at different times.

- efficiency assessment is carried out by comparing situations using different irrigation technologies; the basis of the efficiency assessment is the growth of cash inflows and outflows received by each project participant;

• principle of positivity and maximum effect: when comparing alternative options, preference should be given to the option with the highest effect value;

• consideration of the influence of uncertainty and risk factors accompanying the project implementation.

Efficiency is assessed based on incremental cash flow. The incremental cash flow is defined as the difference between cash flows for options using different irrigation technologies.

In efficiency calculations, cash inflows and outflows are expressed in constant prices as of a specific date (for example, at the time of the calculations). At the same time, all cost indicators must be expressed in prices as of the same date, and this date must be indicated.

Efficiency calculations use agricultural product prices, which include premiums and discounts for quality, but do not include subsidies and VAT.

Efficiency calculations primarily use prices that have emerged in the year of implementation of irrigation technologies in wholesale and retail markets, exchanges, and fairs, as well as when selling agricultural products to procurement organizations, processing enterprises, and other third-party firms.

In the absence of established prices for a particular product in the region, its price is determined in the following order: the volume of produced products is converted into feed units (oats) based on zonal coefficients, and then by multiplying by a coefficient of 0.8 - into grain units - wheat, for which established prices already exist in the given region.

The main indicator of efficiency is the discounted net income growth, defined as the cumulative balance of the incremental cash flow for the entire calculation period.

The growth of net present value when implementing irrigation technologies according to the recommendations of scientific and technical materials can be calculated based on the equation:

NPV = Y 4{3i - C - K) { l + E) - \ where NPV is the net present value, rub/ha;

Е - annual interest rate, %;

Т - calculation period, years;

К - capital investments, rub/ha;

Ef - the effect obtained as a result of the project implementation, rub/ha:

Ef = Eor+ Eep + E„ + Eu, where Eor - the effect of irrigation in the form of an increase in the value of produced agricultural products, rub/ha;

The introduction of modern irrigation systems requires an accurate calculation of the payback period. A simple comparison of yield before and after irrigation is not enough for this. To get a real picture, it is necessary to evaluate the eco-economic effect in a complex manner. Uneven irrigation, deviation of humidity from the norm, and the leaching of nutrients directly affect the profitability of the farm.

Calculation of economic benefits from irrigation

The decision to purchase irrigation equipment is made based on the calculation of the net economic effect. It should tend to its maximum throughout the entire calculation period of the equipment's operation. To assess efficiency, a formula is used that sums up the revenue from the yield increase and subtracts all associated costs. This approach avoids double counting of capital investments.

E_or = Σ [ ΔB_t − C^e_t − ΔC^crop_t − C^env_t − C^d_t − C^t_t + LC_t ] → max

The following indicators are taken into account in this formula:

• ΔB_t — increase in revenue from the sale of products obtained due to irrigation with specific equipment in year t (rub.);
• C^e_t — annual operating costs for irrigation, excluding depreciation for renovation (rub.);
• ΔC^crop_t — increase in annual costs for growing crops on irrigated lands (rub.);
• C^env_t — annual costs for environmental measures: maintaining soil fertility and protecting water resources (rub.);
• C^d_t — amount of damage to the environment from irrigation in year t (rub.);
• C^t_t — sum of direct and indirect taxes (rub.);
• LC_t — liquid value of retired fixed assets in year t (rub.).

To calculate the increase in production and operating costs, a simple relationship is used. It sums up the expenses for growing crops and the costs of maintaining reclamation systems. The increase in revenue from irrigation in a specific year is calculated separately, taking into account the potential yield. This allows for more accurate forecasting of future financial inflows.

C = C_crop + C_m

• C_crop — increase in annual costs for agricultural production (rub/ha);
• C_m — increase in annual costs for the operation and maintenance of reclamation systems (rub/ha).

The increase in revenue from irrigation (ΔB) in a specific year is calculated using the formula:

ΔB = P × (Y^ir − Y^tech) × K₁ × K₂ × K₃ × F_ir × α_j × LUI

For calculations, you will need the following data:

• P (or q_j in year t) — regional wholesale price for the crop (rub/c);
• Y^ir — potential yield of the crop under irrigation under optimal conditions, taken from state variety testing data (c/ha);
• Y^tech — yield without irrigation (c/ha);
• K₁ — coefficient of uniformity of moistening by a specific sprinkler;
• K₂ — coefficient of yield reduction due to the deviation of soil moisture from the optimum;
• K₃ — coefficient taking into account the deficiency of mineral nutrition in the soil;
• F_ir — irrigation area (ha);
• α_j — share of the crop in crop rotation;
• LUI — land use index.

Assessment of environmental risks and prevented damage

The quality of irrigation directly determines environmental safety and resource saving. The performance of sprinklers is evaluated through a special environmental coefficient. Humidity in the root zone must also be within strictly defined limits. For this, indicators of initial and final moisture reserves of the active soil layer are introduced into the formula.

The environmental coefficient of irrigation quality (K_q) is calculated using the formula: K_q = K_m × K_r, where K_m is the coefficient of irrigation efficiency according to Christiansen.

• Coefficient of natural rainfall uniformity (K_r) — 0.9
• Increase in soil fertility in calculations (ΔS) — in fractions of a unit
• Share of crop in crop rotation (αj) — in fractions of a unit

The coefficient of deviation of soil moisture in the root zone from the optimal one is calculated based on the initial (W_i) and final (W_f) moisture reserves of the active soil layer for the calculation period (mm) relative to the moisture reserves of the field capacity (W_fc, mm).

Prevented environmental damage to the soil through the preservation of soil fertility is calculated using a baseline indicator of specific damage. This equation takes into account the actual increase in soil fertility and a correction factor. Additionally, the prevented damage to water resources resulting from reduced soil erosion is assessed. This helps in calculating the real benefit of environmental measures.

E^p_e = D_sp × ΔS × K_f

• D_sp — indicator of specific environmental damage to soils (rub/ha);
• ΔS — increase in soil fertility as a result of reclamation (in fractions of a unit);
• K_f — coefficient accounting for soil fertility (rub/ha).

To calculate the mass of prevented pollution, the difference between indicators before and after reclamation is computed. The actual leaching of harmful substances is determined through the mass of eroded soil. In this process, the hazard class of each specific pollutant must be taken into account. The final efficiency of irrigation technologies always depends on the external parameters of a specific year.

Prevented damage to water resources is determined by the formula: E^w = D^w_sp × ΔM, where D^w_sp is the cost of pollution for a specific water basin (rub/conv. t), and ΔM is the reduced mass of pollutants that did not enter water bodies (conv. t).

The mass of prevented pollution is calculated by the formula: ΔM = M₀ − M₁. Indicators of pollutant influx before (M₀) and after (M₁) measures are calculated through the actual mass of pollutants (m, t) and the coefficient of relative ecological-economic hazard of the substance (K_ei) according to the dependency: M = m × K_ei.

The step-by-step algorithm for evaluating an irrigation project is as follows:

1. Collect data on yields on rain-fed lands and cultivar testing plots to estimate the potential increase.
2. Select irrigation equipment and determine its Christiansen coefficient of irrigation efficiency (K_m).
3. Calculate the annual costs for maintenance of the irrigation system and environmental protection measures.
4. Estimate the prevented environmental damage to soils and nearby water sources.
5. Compare the revenue from the harvest increase with operational, environmental expenses, and taxes using the final efficiency equation.
6. Perform the calculation for several weather scenarios (dry, average, and wet year) to reduce risks from inaccurate climatic information.

Production and climate risks in irrigation

When designing irrigation systems, baseline parameters are calculated for the standard conditions of the region. However, in practice, the planned irrigation efficiency often decreases due to factors that are difficult to anticipate in a standard design. These include technological failures, market fluctuations, and extreme weather events.

Production and technological risks pose the main threat to project payback. They are directly linked to violations of crop cultivation regulations and equipment operation. Below are the main factors that must be monitored during the growing season:

• breakdowns of tractors, towed implements, and specialized machinery;
• fertilizer application in volumes below planned rates;
• sowing, treatments, or harvesting performed with deviations from the optimal plant development phases;
• poor-quality soil preparation and crop care;
• excess consumption of fuel, water, and other resources above the regulation;
• labor time losses due to organizational failures;
• staff errors and negligence;
• crop damage by pests and pathogens.

In addition to technological failures, financial and commercial risks undermine the project's economy. These include falling demand, the appearance of new competitors, payment delays from partners, and fluctuations in market prices. Changes in lending conditions and other force majeure events also directly affect the return on investment.

Methodology for calculating expected yield increase

To obtain a reliable assessment of irrigation efficiency, one cannot rely only on long-term average indicators. The spatial-temporal variability of the climate requires the calculation of the expected integral effect. In practice, this means forecasting the yield increase taking into account the probability of dry and wet years.

• Meteorological data analysis period — 30–50 years
• Lower bound of Cu for dry steppe — 0,21
• Upper bound of Cu for forest zone — 1,0
• Maximum calculated reduction in vegetable harvest — 100%

For a practical assessment of the potential of an irrigated plot, it is recommended to use a step-by-step algorithm. It allows tying planned indicators to the real climatic statistics of the region. The calculation is performed in the following sequence:

1. Collect meteorological data in your soil-climatic zone for the last 30–50 years and construct a probability curve. With its help, determine the probability (P_i) of the occurrence of years with different heat and moisture availability.
2. Determine the yield increase for each type of year (ΔY^irr) by the formula: ΔY^irr = Y_i - Y_p, where Y_i is the potential yield under irrigation, and Y_p is the baseline yield without irrigation.
3. Calculate the expected yield increase (ΔY_var) over the life cycle of the irrigated plot taking into account climatic fluctuations by the formula: ΔY_var = Σ (ΔY_i^irr × P_i).

For predictive calculations of moisture deficit and potential yield loss, reference data from long-term land reclamation studies are used. They are categorized by natural zones and specific crops. The table below shows the risks of yield reduction at different levels of water supply deficit.

Any irrigation system project looks smooth on paper, but in practice, costs almost always exceed those planned. To evaluate the real return on investment for irrigation, design calculations (optimistic scenario) are used only as a base. Based on them, a second, moderately pessimistic scenario must be calculated, which takes into account risks and uncertainty.

Stress scenario calculation: protection against budget overruns

The main risk during the construction phase is an increase in capital expenditure relative to the estimate. It is most difficult to forecast natural factors: hydrological, geological, and climatic conditions on the site. Costs may also increase due to penalties or the loss of material resources. To test the project's resilience, sensitivity calculations are performed for budget increases.

• Minimum estimate recalculation — +10% to capital expenditure volume
• Average estimate recalculation — +20% to capital expenditure volume
• Maximum estimate recalculation — +30% to capital expenditure volume

In addition to capital costs, it is necessary to consider the uncertainty of operating expenses during the system's service period. For this, reserve funds are factored into the calculations.

All expected cash flows under the moderately pessimistic scenario are calculated taking these adjustments into account. Based on them, the final indicators of expected irrigation efficiency are determined using standard rules: expected net present value (NPV) and expected internal rate of return (IRR).