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The western U.S. is expected to experience more frequent and severe droughts as a result of climate change, with potentially large impacts on agricultural production and the economy. Irrigated farmers have multiple options for minimizing the impact of drought including switching to more efficient irrigation technologies. More efficient technologies that increase the fraction of the water available to the crop root zone would allow farmers to maintain current production levels with less water. However, these systems are capital intensive. The objective of this study is to explore when (and under what climatic conditions) it makes economic sense for farmers to invest in new irrigation systems. We examine this in the Yakima River Basin in Washington State of the U.S. We use VIC‐CropSyst, a large‐scale grid‐based modeling framework that mechanistically simulates hydrologic and agricultural processes. Water supply simulated by VIC‐CropSyst drives a river system and water management model (YAK‐RW). A computational platform was developed to perform the economic analysis for each grid cell, crop type, and future climate scenario separately, which allowed us to explore whether the implementation of more efficient irrigation systems would be economically viable. Our results indicate that investing in a more efficient irrigation system improves agricultural economy of the Yakima River Basin (9% −25%). We also show that at the farm level, more significant droughts can provide economic incentives for investment up to a point. For severe climate change projections, droughts become frequent and severe enough that economic benefits of improving water use efficiency do not exceed investment costs. Key Points: Climate change increases the frequency and severity of drought; however, in some cases, this does not provide enough economic incentive for investment in a new irrigation systemAt the farm level, the viability of investment depends on crop type and severity of droughtsNet economic benefit at the basin scale depends on the cropping mix [ABSTRACT FROM AUTHOR]

Irrigation efficiency plays an important role in agricultural productivity; it affects farm-scale water demand, and the partitioning of irrigation losses into evaporative and non-evaporative components. This partitioning determines return flow generation and thus affects water availability. Over the last two decades, hydrologic and agricultural research communities have significantly improved our understanding of the impacts of climate change on water availability and food productivity. However, the impacts of climate change on the efficiency of irrigation systems, particularly on the partitioning between evaporative and non-evaporative losses, have received little attention. In this study, we incorporated a process-based irrigation module into a coupled hydrologic/agricultural modeling framework (VIC-CropSyst). To understand how climate change may impact irrigation losses, we applied VIC-CropSyst over the Yakima River basin, an important agricultural region in Washington State, U.S. We compared the historical period of 1980–2010 to an ensemble of ten projections of climate for two future periods: 2030–2060 and 2060–2090. Results averaged over the watershed showed that a 9% increase in evaporative losses will be compensated by a reduction of non-evaporative losses. Therefore, overall changes in future efficiency are negligible (−0.4%) while the Evaporative Loss Ratio (ELR) (defined as the ratio of evaporative to non-evaporative irrigation losses) is enhanced by 10%. This higher ELR is associated with a reduction in return flows, thus negatively impacting downstream water availability. Results also indicate that the impact of climate change on irrigation losses depend on irrigation type and climate scenarios. [ABSTRACT FROM AUTHOR]