Pelly’s Lake is a naturally occurring retention basin near Holland, Manitoba, that flows into the Boyne River, a tributary of the Red River, which has a history of significant flooding. Fertile agricultural lands surround the lake. The water storage capacity of the lake is 2.1 million m3, making it a large water source for irrigation to help farmers manage the risk of variable precipitation with climate change. In 2017, researchers from the University of Saskatchewan performed an economic assessment of adaptation actions involving Pelly’s Lake, with the goal of reducing water stress on agricultural crops by supporting irrigation during periods of drought under different emissions scenarios (RCP2.6, RCP4.5 and RCP8.5). Projected changes in precipitation and temperature were input into an integrated “hydrological-reservoir-irrigation-plant growth” economic model of the watershed, developed from 2005‒2014 data. Use of the multi-purpose water retention system at Pelly’s Lake as an adaptation measure to help farmers manage risks related to water stress under climate change conditions does not pass a standard cost-benefit test, when considering only the irrigation benefits provided to participating farmers. However, if the range of co-benefits provided by the system were to be included in the analysis, the system would be deemed economically viable as an adaptation measure. The private co-benefits provided by the system—if monetized—would be enough to create a business case for farmers to invest in irrigation, while providing wider economic and environmental benefits to the region.
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