A farmer in the Annapolis valley is concerned about the increased periods of drought due

to climate change. Let us suppose that the projected annual drought duration over the next 20

years is Weibull distributed with = 1/30 and = 3. The farmer knows from experience that

if the drought in each year goes on for any days beyond the irrigation capacity of his well that

he will lose his crop, worth $100,000. He also knows from experience that his well will provide

irrigation for up to 45 days (we will assume that the winter recharge of the aquifer will remain

unchanged over the next 20 years). The farmer is considering three options: a) continue with

his existing well, b) deepen his existing well by another 200 ft at a cost of $10,000 to increase

the number of days he can irrigate to 60 days, or c) drill another well at the other end of his

property at a cost of $30,000 to increase the number of days he can irrigate to 90 days. Over

the next 20 years, which option makes the most sense for this farmer?