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. ¿ American Geophysical Union 1995