Efficient Water Use for Sustainable Irrigation Industry

The aim of this paper is to evaluate the economic efficiency of irrigated agricultural enterprises using a non-radial data envelopment analysis approach. While a number of studies have used radial measures based on data envelopment analysis to obtain efficiency scores for a given production technology, we calculate non-radial measures to understand the efficiency of using individual inputs employed in the production process. In particular, the measures of economic efficiency are decomposed into water use efficiency and managerial efficiency. This decomposition enables us to obtain an efficiency score for the use of water as an environmentally sensitive input in irrigated crop production systems. Treating water input in this way goes beyond traditional measurement of water use efficiency, as the calculated efficiency scores can be used as indicators of sustainability in terms of water withdrawals for irrigation purposes. The results show that the overall efficiency for the considered irrigated enterprises is quite high. This is in contrast to the findings on the water use efficiency scores, which are fairly low. This indicates that while Australian irrigated farms are comparatively more efficient in overall farm activity management, they are not very efficient in managing water resources. In turn, this threatens the sustainability of this industry. There is a substantial variation of water use efficiency scores across irrigated enterprises and across regions. Analysing these variations can provide important insights for current policy and for future efforts to improve water use efficiency that will lead towards more sustainable irrigation industry.