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Price induced water irrigation: Unraveling conflicts and synergies between European agricultural and water policies

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Author Info

  • Athanasios Kampas

    ()
    (Agricultural Economics and Rural Development Department, Agricultural University of Athens)

  • Athanasios Petsakos

    ()
    (Agricultural Economics and Rural Development Department, Agricultural University of Athens)

  • Stelios Rozakis

    ()
    (Agricultural Economics and Rural Development Department, Agricultural University of Athens)

Abstract

The 2003 CAP reform considerably affects cropping patterns in European agriculture. At the same time the imperatives of the forthcoming Water Framework Directive (WFD) is expected to modify irrigation decisions especially in Southern Europe where irrigated agriculture utilizes about 70-80% of total water. This paper examines the combined effect of CAP reform and the application of likely volumetric water pricing on water demand by taking into account three drivers of change, namely extensive margin changes, intensive margin changes and irrigation technology shift. For low rates of water prices, CAP reform contradicts the WFD objectives since it leads to cropping patterns that consume more water resources. On the contrary, as water prices increase, decoupling and water pricing display a synergistic effect on water conservation. Finally, decoupling substantially increases the efficiency of water pricing in terms of water conservation. As a result, the post CAP reform regime clearly dominates the prior CAP reform regime when an index of value for money water conservation is examined.

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File URL: http://aoatools.aua.gr/RePEc/aua/wpaper/files/2010_5_kampas.pdf
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Bibliographic Info

Paper provided by Agricultural University of Athens, Department Of Agricultural Economics in its series Working Papers with number 2010-05.

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Length: 21 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:aua:wpaper:2010-05

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Web page: http://www.aoa.aua.gr
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Related research

Keywords: irrigation; bio-economic modeling; mathematical programming; policy analysis; price endogenous model; water demand; CAP reform; WFD;

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  1. José A. Gómez-Limón & Manuel Arriaza & Julio Berbel, 2002. "Conflicting Implementation of Agricultural and Water Policies in Irrigated Areas in the EU," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(2), pages 259-281.
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