Orestimba Creek Feasibility Study - Stanislaus County

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Economics Appendix – Draft Report - Orestimba Creek Feasibility Study, Stanislaus County, California – September 2012 Attachment B: Agricultural Economic Analysis The Planning Guidance Notebook of the USACE (ER 1105-2-100) and the IWR Report 87-R-10 provide guidance and rules on the treatment of agricultural crops. These documents serve as the basis for the agricultural analyses. Further, damages expressed as annual values are calculated utilizing the FY12 discount rate of 4 percent with an analysis period of 50 years. All benefits and costs are expressed at an October 2011 price levels. The base operational year is 2015. ER 1105-2-100, Appendix E, beginning on page E-113 includes specific guidance for studies where the primary damages occur to agricultural crops. Primary damages in this evaluation focus on the crop damage, loss of stored crops, and loss of farm equipment. These damages are directly related, and evaluated with special consideration for the expected time of seasonal flooding as well as the variability associated with crop prices and yields. The identified hydrologic/hydraulic variables, discharge associated with exceedence frequency and conveyance roughness and cross-section geometry, also apply to agricultural studies. Although the crop damage is directly related to the duration of flooding, damage to commodity storage and equipment is based on stage-damage relationships and is computed accordingly. Procedurally, the damage assessment is coordinated with the residential and non-residential structure/content damage analysis conducted using HEC-FDA, which is a USACE-certified planning model. Farm Budget and Crop Data Agricultural crop acreage was developed by the Sacramento District COE with the assistance of the Stanislaus County Agricultural Commissioner’s Office using a Geographic Information System (GIS) platform. GIS mapping of agriculture allows for the overlay of floodplains generated by FLO-2D, which is a hydraulic engineering model, onto a separate GIS layer of crop acreages in order to identify the number of acres and types of crops flooded. . Various crop budgets were obtained from the University of California at Davis’ Agricultural & Resource Economics web site. Historical crop yields and values for various floodplain crops were obtained from the U.S. Department of Agriculture, National Agricultural Statistics Service web site of the Stanislaus County’s Agricultural Commissioner’s Annual Crop Report. Agricultural land restoration costs are based on previous USACE studies and farm budget reports. Monthly flood probabilities were derived based on the percentage of historical annual peak discharges occurring in each month as documented by the Water Management Section, Sacramento District COE; monthly probabilities are displayed in Table 1. Agricultural Economic Damages Related to Flooding in Orestimba Creek Vicinity, California The analysis below outlines the general concepts and procedures used in the computation of the agricultural damages incurred by assumed flood events within the study area. 52
Economics Appendix – Draft Report - Orestimba Creek Feasibility Study, Stanislaus County, California – September 2012 Procedures used in the Estimation of Agricultural Damages The discussion below indicates considerations used in the computation of agricultural damages within the Orestimba Study Area. The current land use for the Study Area was secured from the County Assessor data identified as the agricultural land area for each flood event. The land/crop uses were categorized into five general categories for analytical and reporting purposes. The five general categories of land/crop use are: 1. Truck and Specialty Crops – including processing tomatoes 2. Field Crops – including row crops like corn, broccoli, and beans 3. Orchard – including walnuts and almonds 4. Alfalfa and irrigated pasture 5. Other – including lands irrigated and native pasture and lands that are idle, semiagricultural, and native vegetation Agricultural damages due to flooding for each acre are computed by adding four elements: 1) The cumulative direct production or annual variable costs incurred prior to flooding 2) The net value of the crop affected by the flood event 3) Depreciated value of perennial crops lost as a direct result of flooding 4) The land clean-up and rehabilitation resulting from flooding Direct Production Costs Cultural costs are incurred periodically throughout the crop year. Examples of these direct production costs include: seedbed preparation, chemical and fertilizer application, hired labor, seed, planting, and weed and pest control. These individual crop costs for the five crops are computed on a monthly basis to determine the amount of expended cultural costs at the time of the flood event. An example of the monthly production costs is included in Table 4 for the production of blackeye beans in the study area. Net Value of Crop The second component represents the net income of the crop plus return to fixed items of production such as land, labor and management, real estate taxes, and fixed costs associated with pre-harvest and harvest activities. The net value of the crop is the amount of revenue that the producer may not get if a significant flood event were to occur on his property. For purposes of this analysis, the value of the crop is determined computationally by using a three to five year average for both yields and prices in order to alleviate some of the short-term variability that is common in agricultural production. The prices and yields are evaluated in an MS Excel spreadsheet analysis using the @Risk add-in software developed by the Palisades Corporation; this software allows uncertainty around key variables to be explicitly considered. For example, a triangular distribution which describes the low, high and median prices and yields was used to derive the appropriate crop values for use in this analysis. 53
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Orestimba Creek Feasibility Study - Stanislaus County

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