On-farm runoff collection through small impoundments (ponds) is a potential irrigation water source. This study evaluates the economic feasibility of such impoundments for supplemental irrigation in the Blacklands region of Texas. This is done using a risk sensitive model which simultaneously considers water supply, irrigation system investment, irrigation scheduling, and crop mix selection. A two-stage, mixed integer, nonlinear mathematical programming model under uncertainty, was used to formulate the problem and solved with Benders' decomposition. Pond-based supplemental irrigation is found to be both risk reducing and net income increasing in the study area. The model results also show off-farm water needs to be worth more than $100 per acre foot to make impoundments undesirable. 10, 249-257, 1987. Tsiang, S.C., The rationale of the mean-standard deviation analysis, skewness preference and the demand for money, Am. Econ. Rev., 62, 354-371, 1972. Yaron, D., and A. Dinar, Optimal allocation of farm irrigation water during peak seasons, Am. J. Agric. Econ., 64, 681-689, 1982. Yeh, W., Reservoir management and operation models: A state-ofthe-art review, Water Resour. Res., 21, 1797-1818, 1985. Ziari, H. A., The economic feasibility of run-off impoundments for supplemental irrigation in Blacklands region of Texas, Ph.D. dissertation, Tex. A&M Univ., College Station, 1991.