Pursuing an agricultural drainage project may seem like a straightforward economic analysis, but this often isn’t the case. Before proceeding, thoroughly and thoughtfully evaluate your drainage project.
For example, consider all costs and benefits, probable efficacy and potential environmental impacts, such as changes in streamflow, nitrate loss to surface water and wildlife habitat loss. Also investigate the alternatives to artificial drainage, to determine if they’re applicable for your site.
Regardless of which course you choose, contact your local Natural Resources Conservation Service (NRCS), Soil and Water Conservation District (SWCD) and ditch inspector to ensure you’re complying with the rules and regulations.
How to evaluate drainage projects
For centuries, people have been using artificial drainage for agricultural production. Over the last hundred years, there’ve been several periods of increased drainage activity attributable to many factors.
Most recently, improved technology for installing subsurface drains, coupled with the ability to evaluate yield improvements with yield monitoring equipment, have significantly improved the economics of artificial drainage for many soils (Figure 1). Despite these improvements, drainage still represents a significant financial investment for any farm.
The benefits of agricultural subsurface drainage, also known as tile drainage, include:
Reduced crop stress.
Stand loss prevention.
Better utilization of available nutrients due to more extensive crop roots.
Reduced soil compaction.
The ability to perform field activities (particularly planting) in a timely fashion due to soil trafficability.
These benefits result in higher yields, and therefore higher income for a crop that already has a fixed input cost (Figure 2).
Before planning a drainage project, have an idea of what you think this improvement will mean to your bottom line. Acknowledging that each year differs climate-wise, consider improved profitability for wet and dry years and the likelihood of each over a 10-year period.
Every farmer who’s completed a tiling project knows the installation cost on a per foot basis.
In addition to this basic cost, there are costs associated with outletting the water. Some of these may include installing a new tile main, engineering and design costs, legal fees, easements and permitting, pumping and/or lift stations and repairs and other improvements to an existing outlet (Figure 3). It’s important that cost estimates include all these factors.
Plus, there may be unwanted environmental costs associated with agricultural drainage, such as increased field losses of nitrate-nitrogen or increased pressure on downstream drainage infrastructure. Although it’s difficult to quantify these environmental effects in dollars, they do represent real costs to the public.
It’s important to note that properly designed systems can minimize some of these costs. When the increased income versus the project costs are considered over a 15- to 30-year period, you can determine the return on investment. This is an important first step, but isn’t the final evaluation.
Every farmer considering a drainage project should visit the county Natural Resources Conservation Service (NRCS) and Soil and Water Conservation District (SWCD) office early in the planning process. Staff from these agencies will review the project to determine if it affects any wetlands.
If you proceed with a drainage project that removes an existing wetland that’s not considered to have been drained prior to 1985, you could risk your eligibility for USDA farm programs. In addition, violating the state Wetland Conservation Act (WCA) also requires a mitigation plan before you can proceed. Violating Swampbuster and/or the mitigation plan required for state WCA compliance could make a small project very expensive in the long run (Figure 4).
The Swampbuster provisions of the farm bill allow for some drainage of wetlands as long as you mitigate the loss by creating or restoring another wetland. The state WCA has similar provisions. If you follow this route, you also obviously need to consider that cost as part of the drainage project.
Public drainage systems
If you intend to connect to an outlet that’s part of the public drainage system, you should also visit with your county ditch inspector.
In Minnesota, landowners receiving benefits from the specific ditch or tile main share the costs of the public drainage system. If you’re assigned no benefits (meaning, you don’t share in the system’s cost), you don’t have the right to connect a drainage project to the system.
A final big picture consideration is whether existing tile mains and ditches have the capacity to remove the new water in a timely fashion. Tile laterals installed into mains that are already at capacity may have limited effectiveness and are unlikely to achieve the drainage coefficient (the amount of water the system can drain in a 24-hour period) the system is designed for.
Specifically, investigate drainage easements that are in place and also whether those downstream currently have flooding problems due to water from existing drainage. Attention to these matters will ensure a new system works as designed. Plus, it’ll help avoid lawsuits and maintain friendly relations with your neighbors.
Using precision agricultural data has allowed for some creative analysis of inputs, yields and economics on a site-specific basis. Increased crop prices over the past several years were matched with greatly increased input costs.
Converting a yield map into a profit map
Make sure you know your input costs on a per-acre basis. It’s not always possible to determine exactly what price you’ll receive for your crop, but most farmers have either an estimate or a target price in mind.
Using these two figures, you can convert a yield map into a profit map (Figure 5). Based on this profit map, you can estimate a drainage project’s effect. It’s likely that the benefits on one soil type versus another won’t be the same. If you consider the project’s potential effectiveness on one part of the landscape versus another, you may find yield increases that don’t exceed the breakeven point or yields that highly vary from one year to the next.
This is why many agricultural economists have long advised that farming marginal land is a bad practice. Similarly, many farmers have found these acres consume time and resources that could be devoted to more profitable parts of their farm.
The simplest evaluation you can make regarding drainage alternatives is whether the land is worth more to you drained or to someone else undrained. There are many options to consider, some of which may be quite financially lucrative, or fit well with your personal objectives and/or philosophies.
Factor in land ownership
The first overarching consideration is whether you own or rent the land. If you rent it, you’ll obviously need to involve the landowner in decision-making. Some landowners lack the ability to proceed with alternative options for various reasons, so you may need to be involved with the process.
If you own the land, another consideration is whether you wish to continue owning the land. Selling the property so the money can be reinvested in other land is always an option.
You may also find some creative, locally available solutions that are attractive to you. For example, local sportsmen’s groups may have project funds, and other groups or individuals may also be looking to work with wetland issues. Staff at your county Soil and Water Conservation District (SWCD) will usually know if there are options like these.
Wetland restoration programs
The majority of income-producing alternatives for the property involve restoring a wetland on the site (Figure 6). There are many programs for proceeding with a wetland restoration. One major difference between many of these options is the length of time you commit to leaving the new wetland in place.
USDA Conservation Reserve Program (CRP)
Several parts of the USDA Conservation Reserve Program (CRP) may cost-share the restoration and require only a 10- or 15-year agreement. However, these options don’t pay as well as longer-term or perpetual agreements. Some long-term or permanent programs, such as U.S. Fish and Wildlife Service easements, may pay as much as the land’s value.
Wetland Mitigation Credit Bank
Another popular option in Minnesota is to enter into the Wetland Mitigation Credit Bank administered by the Board of Soil and Water Resources (BWSR). The state WCA requires that those who drain wetlands for development, road-building or other purposes restore an equal or larger amount of wetlands in exchange.
Landowners that obtain prior approval and then restore a wetland with no public financial assistance can register their wetlands into the bank and sell their credits on the open market. Some of these credits can be sold for significantly more than the land’s actual value—in some cases, two to four times more.
There are many other program options administered by the government units already mentioned, as well as local sportsmen’s groups that may have funds to put toward projects.
Sorting out these options may seem confusing and time-consuming, but visiting your county SWCD is a good place to start. They’re not the administrators of most of these programs, but can usually counsel you toward your most desirable options and provide contact information.
Should you choose to enroll your property in the Wetland Mitigation Credit Bank, they can ensure you follow the necessary criteria to make the project eligible.
One final note to remember is that, in most cases, the landowner isn’t required to retain ownership of the wetland once the program obligations have been fulfilled. This means you could sell the property, further increasing income from the project.
Reviewed in 2018