Orestimba Creek Feasibility Study - Stanislaus County

Economics Appendix – Draft Report - Orestimba Creek Feasibility Study, Stanislaus County, California – September 2012
It is noted that short-term planning prices and yields should not be used for planning capital purchases
that extend beyond the next production year. Review of land grant university’s agricultural economics
new releases indicate that the use of short-term yields and prices is not recommended because current
supply/demand conditions rarely continue for long periods of time and are poor indicators of future
trends. Instead, intermediate to long term planning prices and yields are most appropriate for
evaluating alternative plans. USDA Agricultural Projects to 2020, published in February, 2011 by the
Office of the Chief Economist, World Agricultural Outlook Board, USDA substantiates this claim. It
indicates that projections based on specific assumptions surrounding macroeconomic conditions,
public policy, weather/climate, and international development, with no domestic or external shocks to
global markets, suggest that the long-run development for global agriculture reflects a resumption of
steady world economic growth following the global recession and continued demand for biofuels. This
analysis combined with the aforementioned assumptions support increases in consumption, trade, and
prices. Based on the USDA analysis it is believed that the most recent prices used in this analysis may
conservatively estimate benefits of flood projects. It is, however, difficult to quantify the price and
yield increases, especially while also estimating cost of production increases, to arrive at a long-term
net income per acre value. Accordingly, the most recent prices, yields, and cost of production are used
in this analysis and considered appropriate for this level of evaluation.
Seasonality
Within the computational framework used for the crop damage analysis, the season of the year that the
flood occurs greatly impacts the amount of crop damages sustained. If flooding occurs early within
the year, the producer may be able to re-prepare the seedbed and plant, and ultimately may realize a
return on his efforts. Conversely, a flood of substantial proportion occurring at harvest time will most
certainly result in complete loss for the entire year.
The probability of a storm occurrence in any particular month was provided by the District hydrologist
for the study area vicinity and describes the likelihood of a storm occurring for each month throughout
the year. These monthly probabilities were used as input into the crop damage analysis.
. The monthly probability of flood occurrence was derived from peak annual flow data secured
from the Water Management Section, USACE, Sacramento District. Due to year-to-year
variability flood occurrences may be as much as 4 weeks early or later than the flood occurrence
midpoint. These flood occurrence probabilities for the Newman study area are displayed below
showing the flood event probabilities with uncertainty associated with each month:
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