My peach orchard is 34 acres and I'm deciding whether to put $180k into a drip conversion or walk away from the whole block

The assumption doing the most work in your payback math is that $11k in water savings is stable. If curtailments come through and flood rights get reduced or priced differently, your baseline water cost changes anyway, which means the $11k figure was built on a counterfactual you may not have access to for much longer. That cuts both ways: curtailment risk makes drip more defensible on a regulatory basis, but it also means your seller of the status quo (flood irrigation, known cost) is already a depreciating option.

The number I'd push on is the $31k. How much of that is priced surface water versus pumping cost versus district fees? If a meaningful portion is district-assessed regardless of delivery method, your actual savings on conversion shrink, and the 16-year payback extends. Your drip contractor has an obvious incentive to present the full $31k as addressable. Get a second opinion on the savings projection from someone without a commission on the install.

The risk you did not mention is what drip conversion does to your sale optionality. A 34-acre peach block with a modern drip system and a water compliance story is a materially different asset to a buyer than a flood-irrigated block facing curtailment uncertainty. If you sell in year 8 rather than year 16, the payback math stops mattering and the improvement may be reflected in price, especially to a buyer with a longer horizon than yours or a different cost of capital. The sunk cost framing is a distraction from that calculation.

Walking away from the block entirely is a different analysis than converting versus not converting. A tax professional and potentially an agricultural land broker should be in that conversation before you decide the block is a write-off, since the structure of any disposition has consequences that sit outside what I can address here.

What is the actual water source mix, surface allocation versus groundwater, and do you have any curtailment priority position in the district?

The curtailment risk is what would push me off flood faster than the savings math. If the county actually restricts surface water allocations, your $31k water cost doesn't go to $20k, it potentially goes to zero productivity on the block, and then the drip conversion becomes irrelevant because you're buying water at spot prices or fallowing.

I'd want to know if your water rights are senior or junior before I spent another dollar on anything. That single fact changes the whole calculus.

The $11k savings figure is where I'd push back hardest, not the payback math itself. Contractors quote water savings based on design efficiency and average seasons, but they're not accounting for your specific soil profile, your tree spacing, or the fact that 12-year-old peach roots on flood have spread laterally to chase water in ways that drip placement won't immediately replicate. First two seasons after conversion you'll likely be running supplemental flood on stress days anyway while the trees adjust, which compresses your actual savings. I've seen this on a walnut conversion in Tulare County, quoted $14k annual savings, realized $7,200 in year one and $9,800 in year two. The savings are real but the timeline to full realization is longer than the contractor's sheet shows.

What I'd actually do here is a partial block conversion on your highest-producing rows, whatever that is, maybe 12 to 14 acres, and see what your packing shed contract looks like after next season before you commit the full $178,500. If the shed renegotiates anyway you've limited your exposure to roughly $65k instead of $180k and you've got real data on actual savings per acre rather than projected. The curtailment question is real but curtailments almost always have phase-in periods, sometimes three to five years, and that's enough runway to make the partial conversion decision with better information than you have right now. Walking away from $214k already in is one math problem. Locking in another $180k on a contractor's savings projection is a different one, and you're treating them like the same decision.