The Nexus of Irrigation-Water Salinity, Agricultural Policy and Long-Run Water Management: Lessons from the Case of Israel

This paper incorporates the detrimental agronomic effects of irrigation-water salinity into an empirical economy-wide dynamic hydro-economic model to study the interactions between salinity, agricultural policies and optimal long-run water-allocation policies and water-infrastructure plans. Application to the case of Israel indicates economic viability of large-scale delivery of desalinated water for agricultural irrigation during a 30-year period (2016–2045). We explain this finding by the large share of salinity-sensitive crops in the total irrigation-water consumption and production value of the Israeli vegetative agriculture sector, which stems from the historical policy to protect local agriculture. On average, the annual damage caused by the presence of salts in Israel’s water sources is evaluated at nearly $4,500 per hectare of arable land, comprising deadweight loss in both the water and agricultural economies. Overlooking salinity’s agronomic effects in the design of water infrastructures entails an annual welfare loss of nearly $1,360/hectare, and income redistributions wherein the profits of water suppliers increase significantly at the expense of the economic surpluses of urban water users, farmers, and consumers of agricultural products.