Economic evaluation of investment in research: the use of supplementary irrigation in Australian sugar cane production

Canegrowers are under intense economic pressure since sugar prices are currently lower than they have been for several years while the cost of inputs continues to rise. Many growers recognise the need to expand production to remain viable in the long term and intensification of farm operations by supplementary irrigation is an option. Often, the water resources available to these growers are limited and questions about the best way to use these resources to supplement rainfall are frequently asked. Recently reported research has shown that significant responses to the application of limited amounts of irrigation water are possible in some years. Recent changes in the system of funding research have raised concern about the profitability of research investments and have created a climate in which evaluation of research through cost-benefit analysis is more common. In this paper, the benefits of research into supplementary irrigation with limited water resources are reported. Sensitivity analysis was used to evaluate the effects of changes in the value of key parameters on the cost-benefit ratio.