Development of a Coupled Hydro-Economic Model to Support Groundwater Irrigation Decisions

Boyao Tian , Andrea Brookfield, Margaret Insley

Groundwater sustains global agriculture but faces significant pressure from overexploitation, threatening long-term water security. Achieving a balance between agricultural productivity and sustainable groundwater use requires decision-support tools that are both practical and robust. This study develops an accessible farm-level hydro-economic model that integrates groundwater dynamics with economic outcomes to evaluate irrigation strategies under regulatory and physical constraints. The model estimates land value over time while incorporating uncertain precipitation, irrigation practices, and regulatory limits. This research presents a novel application of Conditional Value-at-Risk to assess economic risk of groundwater irrigation by focusing on the tail of the probability curve, emphasizing potential extreme adverse outcomes rather than average performance. Applied to a representative High Plains Aquifer site, the model shows that more pumping does not guarantee greater profitability, as diminishing returns and aquifer depletion can undermine long-term benefits. Instead, irrigation strategies aligned with site-specific aquifer properties and regulatory thresholds improve both economic performance and sustainability. This scalable approach provides a practical framework to inform irrigation policy, support farmer decision-making, and promote sustainable groundwater under growing uncertainty.