This site is currently under development and is not yet launched. If this site is ready to be launched, please contact webadmin@anr.msu.edu.

Economics of Drainage

For the pdf version of this bulletin, click here.

 

9. Economics of drainage

Subsurface drainage has a clear economic advantage. Percent corn yield increase can range from 20% to 80%. Payback period can range from 2 to 6 years for corn (Ghane et al., 2021). The site-specific payback period depends on:

1- Climate (temperature and rainfall).

2- Drainage design (drain depth and spacing)

3- Soil properties (saturated hydraulic conductivity and depth to restrictive layer)

4- Economics (interest rate, depreciation, maintenance cost, pipe cost, installation cost, corn price).

Drainage Does Not Cost. It Pay!

 

How should drainage investment be done when renting land?

Typically, drainage investment is done by the landowner because it increases the value of the land. In the scenario that the land operator wants to invest in the drainage system, the rental value should not increase as the operator is paying for the drainage system. In addition, the operator and landowner should agree on having a long-term lease that provides enough time to pay off the drainage-installation loan (FarmProgress, 2010). The lease term should be greater than the amortization period of the drainage-installation loan. Otherwise, a buyout clause should be added to the lease agreement.

 

Other Resources

The following are resources to help better understand the economics of subsurface (tile) drainage:

  1. Iowa State University has published an article entitled understanding the economics of tile drainage. Click here to read the article.
  2. Here is a link to an interactive economic calculator for subsurface drainage.
  3. Iowa State University also has a video.