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Spotlight on Economics: An Initial Assessment of How the Proposed Fargo-Moorhead Diversion Might Affect Crop Planting

A recent NDSU study examines the potential for planting delays and sheds light on multiple sides of the FM Diversion issue.

By Dean A. Bangsund, Research Scientist NDSU Agribusiness and Applied Economics Department

The proposed Fargo-Moorhead (FM) Area Diversion Project’s plans include a staging area south of Fargo to retain floodwater, which will create man-made flooding over thousands of acres of farmland.

A recent study by several members of the North Dakota State University Department of Agribusiness and Applied Economics examined the potential for planting delays and prevented planting associated with the FM Diversion. The study considered numerous factors and concluded that the revenue losses to agricultural producers would not be substantial.

How could that be if the diversion is expected to flood thousands of acres of farmland during large spring flood events, with many of those acres now flooding that would not otherwise flood? Before we jump to conclusions, let’s review the key data and fundamental relationships that led to this conclusion.

Although the evaluation process and modeling details are complex, the key is to determine when producers can begin planting and if planting is delayed due to the diversion what, if any, planting delays cost the producer in lost revenue.

To estimate revenue losses, two dates need to be determined for any particular flood event:

  • When flood water leaves the land
  • When spring planting begins in the staging area

Our study used water flow data from the Red River in Fargo to estimate a calendar date when flows would be sufficient to activate the staging area. Historically, nine spring flood events have been large enough to trigger the use of the proposed FM Diversion staging area. There is a calendar date for each of those floods, when staging would have been initiated, had the FM Diversion operated during those events. These dates are the starting point from which the analysis began.

Hydrology data supplied by the FM Diversion Authority is the best current source of information regarding when lands would be inundated and when water would be off the affected lands, based on when the staging area is activated and the size of flood. As economists, we rely on engineers to provide that type of information.

Using historical flood data, combined with hydrology modeling, we estimated the dates when staging would occur, how long water would remain on the land, and when water is off the land.

By adding a dry-down period, we can approximate when the effects of inundation are over. For example, staging begins April 1, it takes two days for a particular storage area to become inundated, seven days for the water to leave that storage area, and another 10 days for dry down. The effects of flooding for that storage area would be over on April 20 (2+7+10 days after April 1).

How do we know how long the staging area will retain floodwater? No one is able to predict those issues with certainty, but engineers and hydrology modelers used past flood data to approximate the flows and duration of a typical flood of a given size.

There will be variations from the hydrology simulations used in this study, as all floods are different and the length of time water remains on the land is largely driven by the size and duration of the flood event. For example, the 1997 flood lasted several weeks and the 2009 flood was, by contrast, very short.

With a basis for estimating when the effects of man-made flooding would be over, the study focused on when spring planting typically starts within the staging area, both in flood years and non-flood years. The study used planting progress data reported by the National Agricultural Statistics Service to estimate historical planting start times and rates of planting progress over the 2000 to 2014 period.

What is all this leading up to? Let’s look at three possible outcomes from the above discussion.

The first possibility is that spring planting always starts several weeks after the effects of flooding are over. What would be the conclusion if this was the most likely situation? The conclusion would be that man-made flooding would have little effect on planting delays and that floods could vary in length without having much influence on producer revenues. Study findings revealed that was not the case.

How about a condition where spring planting is almost always several weeks ahead of when the effects of flooding would be over for inundated lands in the staging area. This is the opposite of the previous condition. What would be the conclusion if this was the most likely situation? The conclusion would be that man-made water storage creates several weeks of planting delays. Again, study findings suggested that was not the case.

The third possibility is that spring planting starts about the same time as the effects of man-made flooding are over. The best data currently available suggests that planting is likely to begin most frequently around the same time the effects of man-made flooding are over. Under these conditions, it becomes very difficult to make sweeping conclusions or provide definitive answers to the issue.

Factors affecting the time for land to dry down, the length of a flood, changes in hydrology (length of time water remains on land), when the flood begins and spring planting conditions (e.g., cold, late spring versus early, dry spring) are ALL going to influence the degree of revenue losses associated with use of the staging area for the proposed FM Diversion. Of course, crop prices, yields and yield decline functions are also direct factors affecting producer revenues and were included in the study.

What we are able to conclude is that there is a high probability of incurring planting delays associated with man-made water storage. But planting delays created by the proposed FM Diversion, at this time, do not appear to be extensive--at least not several weeks in length. Large delays are possible, but those situations are not as likely as shorter delays.

Much work remains to answer all the economic issues, such as implications for crop insurance eligibility, compensation and risk exposure of tenant versus landowner, assumptions on dry-down and cleanup, effects on producers’ costs and profitability, and changes in land and building values, among several other concerns.

The current study indicates that several considerations associated with man-made flooding on farmland remain unresolved. Even though not all issues were addressed in this effort, the study now allows the discussion of the effects of man-made flooding to move forward, with a common understanding on both sides of the issue.

Prior to this effort, most assertions about the effects of the FM Diversion on agricultural production were speculative, and were not productive in developing solutions for agricultural producers in the staging area.


NDSU Agriculture Communication - April 4, 2016

Source:Dean Bangsund, 701-231-7471, d.bangsund@ndsu.edu
Editor:Kelli Armbruster, 701-231-6136, kelli.armbruster@ndsu.edu
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