The future of the irrigator

Now that permanent water is dropping in value what does that mean will be happening to the overall value of your asset. Here is a thought, perhaps the future will look as follows:

1. Own water with the mindset as an investor and want a 10% return on it, so if water is valued at $1500 per meg then you would receive a net return after water holding costs of $150 per meg for letting someone use this water,
2. Own land with the mindset of a small business owner and thus the valuation of the land will be determined by what profit you can make from the land,
3. When calculating what profit you can make from the land the water required is factored in as an annual cost of $150 per meg as per 1 above,
4. The required return on investment you want from the business is 25% as it is considered a reasonable risky enterprise,
5. If your estimated maintainable profit per acre is $500 you would be prepared to pay $2000 per acre, if your estimated maintainable profit per acre is $1000 you would be prepared to pay $4000 per acre, if your estimated profit per acre is $4000 you would be prepared to pay $16000 per acre and so on, these are exlcusive of water.

Not sure if something like this will actually happen as such, but i now the new generation of business owners are making decisions based upon return on investment instead of purchasing a job.

Something to think about