Orestimba Creek Feasibility Study - Stanislaus County

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.
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