In a comments thread, a few weeks ago, regular commentator Observa asked
read somewhere (maybe on the Sydney water supply price hikes for heavy users)that it takes about 7,400L of water to grow a dollars worth of rice compared to a tenth of that volume for fruit and veges and hence we should import our rice. Are those sorts of consumption figures true?
Here’s a a table from an article I published in the Australian Journal of Agricultural and Resource Economics a couple of years ago.
Table 1: Water required for $1 000 gross profit
Commodity Water use, in Ml
Fruit 2.0
Vegetables 4.6
Dairy products 5.0
Cotton 7.6
Rice 18.5
Pasture 27.8
Source: adapted from Hall, Poulter and Curtotti (1994)
Observa’s relativities are right and the number in the table implies 18000 litres for a dollar of profit in rice. Assuming gross profit is around half the value of total output, the number quoted also looks pretty accurate.
Before drawing policy implications, it’s worth noting that irrigating pasture is even more water-inefficient. The quoted number implies that an increase of $40/Ml in the price of water would wipe out all the gross profit from this activity.
So the first big agricultural adjustment is likely to be a shift away from the use of irrigation for pastures. One feature of the table that surprised me is that irrigation for dairy products (which presumably means pastures for dairy cows) is actually quite profitable.