*5.3. Economic Implications*

Reliance upon groundwater is costly in multiple aspects. Groundwater depletion, as a supplement to surface water supply, raises the cost of energy for pumping, the need for drilling new wells, and the need for deepening or repairing wells. Groundwater withdrawals need adequate energy facilities for pumping. Dehghanipour et al. [52] concluded that a reduction in surface water supply raises a challenge to groundwater pumping's sustainable capacity. The sum of direct and indirect losses to agriculture in California was estimated at 2.2 billion dollars in 2014 [53] as the costs associated with groundwater pumping were an estimated 454 million dollars [54]. A farmer in the LRG Valley with a 325-acre farm had to spend about 150,000 dollars to drill a new well capable of producing sufficient quantities for irrigation [55]. The decreases in simulated agricultural income in this paper are in line with these observations.

The simulated initial costs for the IE policy are large during 2017–2050, as would be expected for infrastructure development. As such, the IE policy is a long-term policy that likely requires an up-front investment from the governmen<sup>t</sup> [56]. Increased IE can support immediate irrigated agriculture requirements. Initial water supply security may encourage farmers to plant permanent crops such as orchards that yield higher profits. This may lead to inflexible production systems and expose the investment to increased risk [57]. In the long-term, irrigators have to cover the costs of maintaining the investment and cope with the returning drought. The investment for IE policy requires irrigation water productivity improvement to cover the costs in the long-term. Irrigated agriculture is not profitable for the majority of farmers when productivity remains low [58]. Enhancements in agricultural structure, such as cropland allotment and cropping intensity, promotion of resource conservation technologies, and farm mechanization, will ensure irrigated agriculture's benefits. Turral et al. [59] reviewed global irrigation development and concluded that agricultural water use productivity is needed to achieve a higher value of agriculture. Constant adaptation and flexibility in water strategies and assorted economic incentives will enable regional agriculture development.
