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Analysis of the impact of a volumetric tariff for irrigation in Northern Italy through the “Inverse DiD†approach

Author

Listed:
  • Andrea Pronti

    (University of Ferrara, Department of Economics and Management)

  • Julio Berbel

    (Department of Agricultural Economics, Universidad de Córdoba, Spain)

Abstract

The impact of water-pricing policy in irrigated agriculture in Emilia Romagna (Italy) is evaluated through the analysis of farmers’ water use whereby a flat-rate tariff (2013-2015) is replaced by a two-tier scheme composed of a flat rate plus a volumetric tariff (2016-2018). The policy assessment is performed by an innovative ‘Inverse-DiD’ approach based on the reverse application of the Difference in Differences method. The results indicate that farmers reacted to volumetric pricing by reducing water use per hectare to 56%. The high responsiveness may be explained by the combined impact of volumetric metering itself and the small price increase from the previous flat rate (zero marginal price) to a moderate volumetric tariff (from 0.025 to 0.044).

Suggested Citation

  • Andrea Pronti & Julio Berbel, 2020. "Analysis of the impact of a volumetric tariff for irrigation in Northern Italy through the “Inverse DiD†approach," SEEDS Working Papers 1320, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Jul 2020.
    • Handle: RePEc:srt:wpaper:1320
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    More about this item

    Keywords

    Difference in Differences; Water pricing; Policy assessment; Irrigation Water Management; Emilia-Romagna;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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