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Does efficient water management matter?: physical and economic efficiency of water use in the river basin


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  • Cai, Ximing
  • Ringler, Claudia
  • Rosegrant, Mark W.


With growing water scarcity and increasing competition across water-using sectors, the need for water savings and more efficient water use has increased in importance in water resources management. Improvement in the physical efficiency of water use is related to water conservation through increasing the fraction of water beneficially used over water applied, while enhancing economic efficiency is a broader concept seeking the highest economic value of water use through both physical and managerial measures. Physical and economic efficiency measures are both useful indicators for water management at the irrigation system and river basin level. However, the relationship between physical efficiency and economic efficiency is not always clear and the values of these measures may indicate different directions for water policy and investments in irrigation. Open research questions include, for example: does enhancement of physical water use efficiency always lead to improved economic water use efficiency? How does the change in responsiveness of water allocation and irrigation technology to economic incentives affect physical and economic irrigation efficiency? What is the impact on physical and economic efficiency of various structural and nonstructural improvements? To explore these issues, an integrated economic-hydrologic river basin model is applied to the Maipo River Basin in Chile. A series of modeling scenarios are defined and policy implications from physical and economic efficiencies for basin-wide irrigation water management are analyzed.

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Bibliographic Info

Paper provided by International Food Policy Research Institute (IFPRI) in its series EPTD discussion papers with number 72.

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Date of creation: 2001
Date of revision:
Handle: RePEc:fpr:eptddp:72

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Keywords: Irrigation Economic aspects.; Water resources development.; Water conservation.; Chile.;


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Cited by:
  1. Philip Pardey & Julian Alston & Connie Chan-Kang & Eduardo Magalhães & Stephen Vosti, 2003. "Assessing and Attributing the Benefits from Varietal Improvement Research: Evidence from Embrapa, Brazil," Centre for International Economic Studies Working Papers, University of Adelaide, Centre for International Economic Studies 2003-06, University of Adelaide, Centre for International Economic Studies.
  2. Bouma, Jetske A. & Biggs, Trent W. & Bouwer, Laurens M., 2011. "The downstream externalities of harvesting rainwater in semi-arid watersheds: An Indian case study," Agricultural Water Management, Elsevier, Elsevier, vol. 98(7), pages 1162-1170, May.
  3. Fang, Lan & Nuppenau, Ernst-August, 2006. "Application of a Spatial Water Model in a Chinese Watershed," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia, International Association of Agricultural Economists 25437, International Association of Agricultural Economists.
  4. Peter Hazell & Chakravorty, Ujjayant & Dixon, John & Celis, Rafael, 2001. "Monitoring systems for managing natural resources: economics, indicators and environmental externalities in a Costa Rican watershed," EPTD discussion papers, International Food Policy Research Institute (IFPRI) 73, International Food Policy Research Institute (IFPRI).
  5. Awad, Ibrahim M., 2012. "Using econometric analysis of willingness-to-pay to investigate economic efficiency and equity of domestic water services in the West Bank," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 41(5), pages 485-494.
  6. Jianxin Mu & Shahbaz Khan, 2009. "The effect of climate change on the water and food nexus in China," The Science, Sociology and Economics of Food Production and Access to Food, Springer, Springer, vol. 1(4), pages 413-430, December.


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