Agriculture in the Tongue River Basin: Output, Water Quality, and Implications Agricultural Marketing Policy Center Linfield Hall P.O. Box 172920 Montana State University Bozeman, MT 59717-2920 Tel: (406) 994-3511 Fax: (406) 994-4838 Email: [email protected] Web site: www.ampc.montana.edu Timothy Fitzgerald Assistant Professor Department of Agricultural Economics and Economics Montana State University Grant Zimmerman This publication was Research Assistant developed with financial Department of Agricultural Economics and Economics support from the Risk Montana State University Management Agency USDA and the University of Wyoming. Agricultural Marketing Policy Paper No. 39 i May 2013 ACKNOWLEDGEMENTS We would like to thank the contribution of many individuals who assisted us in understanding the agricultural economy and complex water quality system of southeastern Montana. We particularly thank Steve Anderson, James Bauder, Alexis Bonogofsky, Chuck Dalby, Nick Golder, John Hamilton, Art Hayes, Les Hirsch, Jim Johnson, Wally McRae, Robert Mitchell, Roger Muggli, Brad Sauer, Adam Sigler, Vince Smith, and Myles Watts. We are especially indebted to William Moore for his help with a large part of the geospatial analysis. An earlier version of this report was presented at the Montana Section of the American Water Resources Association annual meeting—we would like to thank participants in those meetings for useful comments. Thanking these individuals in no way implicates any of them in any remaining errors, for which we accept full responsibility. ii TABLE OF CONTENTS LIST OF TABLES ........................................................................................................................ IV LIST OF FIGURES ........................................................................................................................ V LIST OF ABBREVIATIONS ....................................................................................................... VI EXECUTIVE SUMMARY ......................................................................................................... VII INTRODUCTION .......................................................................................................................... 1 BACKGROUND ............................................................................................................................ 2 Previous Studies ........................................................................................................................ 5 AGRICULTURAL PRODUCTION ............................................................................................... 6 Crop Results ............................................................................................................................ 11 Alfalfa ............................................................................................................................... 11 Barley ................................................................................................................................ 12 Corn................................................................................................................................... 13 Cattle Results .......................................................................................................................... 15 Total Value.............................................................................................................................. 18 WATER QUALITY AND ITS EFFECTS ................................................................................... 21 Data ......................................................................................................................................... 23 Identifying Changes ................................................................................................................ 24 Weather Data .......................................................................................................................... 25 Does Water Quality Variation Affect Agricultural Production? ............................................ 26 DISTRIBUTIONAL IMPLICATIONS ........................................................................................ 27 Soils......................................................................................................................................... 27 Irrigation and Soil Type .................................................................................................... 27 Tax Implications ..................................................................................................................... 28 Potential Impacts ............................................................................................................... 30 GENERAL DISCUSSION & CONCLUSIONS .......................................................................... 33 REFERENCES ............................................................................................................................. 34 APPENDIX ................................................................................................................................... 36 DATA SOURCES AND METHODOLOGY............................................................................... 36 Additional Tables .................................................................................................................... 40 iii LIST OF TABLES 1. All Hay vs. Irrigated Hay, Acreage and Yield, Southeast Montana Agricultural District, 2000- 2008, Average Values. .................................................................................................................... 3 2: Coalbed Methane Wells, September 2012. ................................................................................ 5 3: Montana Crop and Irrigation Choices: 2008. ............................................................................ 7 4: Montana Price Series for Agricultural Commodities. ............................................................... 9 5: 2011 Primary Cover. ................................................................................................................ 10 6: Salinity Tolerance of Crops. .................................................................................................... 22 7: Irrigated Soil Types ................................................................................................................. 28 8: Acreage by County and Tax Assessment Category. ................................................................ 29 9: Mean Dollars Assessed Value Per Acre of Land Classifications. ........................................... 29 10: Agricultural Land Tax Receipts, 2012. .................................................................................. 30 11: Tax Assessment Implications of Loss of Irrigation. .............................................................. 31 12: Tax Revenue Implications of Loss of Irrigation. ................................................................... 31 13: Capitalization of Loss of Tax Revenue.................................................................................. 32 iv LIST OF FIGURES 1: Map of Tongue River Basin....................................................................................................... 3 2: Map of T&Y Irrigation District ................................................................................................. 4 3: Acres Irrigated with Tongue River Water ................................................................................ 8 4: Alfalfa Acres ............................................................................................................................ 11 5: Alfalfa Production.................................................................................................................... 12 6: Barley Production .................................................................................................................... 13 7: Corn Acres ............................................................................................................................... 14 8: Grain Corn Production ............................................................................................................. 15 9: Estimated Cattle Inventory ...................................................................................................... 16 10: Average Weight per Marketed Head of Cattle, Montana 1980-2010 .................................. 17 11: Estimated Cattle Gross Revenue............................................................................................ 18 12: Aggregate Gross Value .......................................................................................................... 19 13: Comparison of Gross Revenue Measures .............................................................................. 20 14: Gross Value Forecast ............................................................................................................. 21 15: USGS Water Monitoring Sites .............................................................................................. 23 16: Tongue River Flow at State Line ........................................................................................... 24 17: Seasonal Variation in SAR .................................................................................................... 25 18: Palmer Drought Severity Index ............................................................................................