IDEAS home Printed from https://ideas.repec.org/a/ags/agreko/31732.html
   My bibliography  Save this article

Modelling the marginal revenue of water in selected agricultural commodities: A panel data approach

Author

Listed:
  • Moolman, C.E.
  • Blignaut, J.N.
  • van Eyden, R.

Abstract

South Africa is a water-stressed country where water availability is an important constraint to economic and social development, and will become even more so in the future if this scarce resource is not managed effectively. In order to manage this scarce supply of water, we need to value it. This study focuses on the value of water in the agricultural sector, in particular the marginal revenue of water for six irrigation commodities namely avocados, bananas, grapefruit, mangoes, oranges and sugarcane. A quadratic production function was fitted with an SUR model specification in a panel data study from 1975 to 2002 to obtain marginal revenue functions for each of the six commodities. We found that mangoes are the most efficient commodity in its water use relative to revenue generated (marginal revenue of water equals R25.43/m³ in 2002) and sugarcane the least efficient (marginal revenue of water equals R1.67/m³ in 2002). The marginal revenue of water is not an indication of the true market price. Neither is it an indication what the administered price should be. The marginal revenue of water is rather a guideline for policy makers to determine which industries or commodities within an industry can generate the largest revenue per unit water applied

Suggested Citation

  • Moolman, C.E. & Blignaut, J.N. & van Eyden, R., 2006. "Modelling the marginal revenue of water in selected agricultural commodities: A panel data approach," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 45(01), pages 1-11, March.
    • Handle: RePEc:ags:agreko:31732
    DOI: 10.22004/ag.econ.31732
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/31732/files/45010078.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.31732?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Huffman, Wallace E., 1988. "An Econometric Methodology for Multiple-Output Agricultural Technology: An Application of Endogenous Switching Models," Staff General Research Papers Archive 11003, Iowa State University, Department of Economics.
    2. Michael R. Moore & Ariel Dinar, 1995. "Water and Land as Quantity-Rationed Inputs in California Agriculture: Empirical Tests and Water Policy Implications," Land Economics, University of Wisconsin Press, vol. 71(4), pages 445-461.
    3. Michael R. Moore, 1999. "Estimating Irrigators' Ability to Pay for Reclamation Water," Land Economics, University of Wisconsin Press, vol. 75(4), pages 562-578.
    4. John Faux & Gregory M. Perry, 1999. "Estimating Irrigation Water Value Using Hedonic Price Analysis: A Case Study in Malheur County, Oregon," Land Economics, University of Wisconsin Press, vol. 75(3), pages 440-452.
    5. Grimble, R. J., 1999. "Economic instruments for improving water use efficiency: theory and practice," Agricultural Water Management, Elsevier, vol. 40(1), pages 77-82, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Caroline King-Okumu, 2018. "Valuing Environmental Benefit Streams in the Dryland Ecosystems of Sub-Saharan Africa," Land, MDPI, vol. 7(4), pages 1-23, November.
    2. Roberto Roson, 2017. "Beyond Water Stress: Structural Adjustment and Macroeconomic Consequences of the Emerging Water Scarcity," Working Papers 2017:07, Department of Economics, University of Venice "Ca' Foscari".

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nadia BEL HAJ HASSINE & Michel SIMIONI, 2000. "Estimation Of Two-Stage Models Of Multicrop Production: With An Application To Irrigated Water Allocation In Tunisian Agriculture," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 12, pages 121-141.
    2. Mutuc, Maria Erlinda M. & Rejesus, Roderick M. & Pan, Suwen & Yorobe, Jose M., Jr., 2012. "Impact Assessment of Bt Corn Adoption in the Philippines," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 44(01), pages 1-19, February.
    3. Shumway, C. Richard, 1995. "Recent Duality Contributions In Production Economics," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 20(01), pages 1-17, July.
    4. Bingquan Liu & Yongqing Li & Rui Hou & Hui Wang, 2019. "Does Urbanization Improve Industrial Water Consumption Efficiency?," Sustainability, MDPI, vol. 11(6), pages 1-17, March.
    5. Ay, Jean-Sauveur & Latruffe, Laure, 2013. "The Empirical Content of the Present Value Model: A survey of the instrumental uses of farmland prices," Working papers 157112, Factor Markets, Centre for European Policy Studies.
    6. Hongliang Zhang & John M. Antle, 2018. "Weather, Climate and Production Risk," IRENE Working Papers 18-01, IRENE Institute of Economic Research.
    7. Mykel R. Taylor & Gary W. Brester, 2005. "Noncash Income Transfers and Agricultural Land Values," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(4), pages 526-541.
    8. Lau, K. & Kagan, A. & Post, G. V., 1997. "Market share modeling within a switching regression framework," Omega, Elsevier, vol. 25(3), pages 345-353, June.
    9. Choumert, Johanna & Phélinas, Pascale, 2014. "A Hedonic Analysis Of Agricultural Land Values In A Gm Soybean Area Of Argentina," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182750, European Association of Agricultural Economists.
    10. Philippe Le Goffe & Julien Salanie, 2005. "Pricing manure spreading rights: measure from the land market," Post-Print hal-02338151, HAL.
    11. Shrestha, Ram K. & Alavalapati, Janaki R.R., 2004. "Effect of Ranchland Attributes on Recreational Hunting in Florida: A Hedonic Price Analysis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 36(3), pages 1-10, December.
    12. Sampson, Gabriel S. & Hendricks, Nathan P. & Taylor, Mykel R., 2019. "Land market valuation of groundwater," Resource and Energy Economics, Elsevier, vol. 58(C).
    13. Yoo, James & Simonit, Silvio & Connors, John P. & Maliszewski, Paul J. & Kinzig, Ann P. & Perrings, Charles, 2013. "The value of agricultural water rights in agricultural properties in the path of development," Ecological Economics, Elsevier, vol. 91(C), pages 57-68.
    14. Gregory M. Perry & Lindon J. Robison, 2001. "Evaluating the Influence of Personal Relationships on Land Sale Prices: A Case Study in Oregon," Land Economics, University of Wisconsin Press, vol. 77(3), pages 385-398.
    15. Savage, Jeffrey & Ifft, Jennifer, 2013. "Does Pumping Pay: Groundwater Management Institutions and Cropland Values in Nebraska?," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150581, Agricultural and Applied Economics Association.
    16. Ranjan, Ram & Gollehon, Noel R. & Aillery, Marcel P., 2004. "Explaining Participation in Spot and Options Markets for Water," Working Papers 15650, University of Florida, International Agricultural Trade and Policy Center.
    17. Yu-Hui Chen & Chun-Lin Lee & Guan-Rui Chen & Chiung-Hsin Wang & Ya-Hui Chen, 2018. "Factors Causing Farmland Price-Value Distortion and Their Implications for Peri-Urban Growth Management," Sustainability, MDPI, vol. 10(8), pages 1-18, August.
    18. Sampson, Gabriel & Hendricks, Nathan P. & Taylor, Mykel R., 2018. "Land Market Valuation of Groundwater Availability," 2018 Annual Meeting, August 5-7, Washington, D.C. 274320, Agricultural and Applied Economics Association.
    19. Vos, Jeroen & Vincent, Linden, 2011. "Volumetric water control in a large-scale open canal irrigation system with many smallholders: The case of Chancay-Lambayeque in Peru," Agricultural Water Management, Elsevier, vol. 98(4), pages 705-714, February.
    20. Jeanne DACHARY-BERNARD & Sandrine LYSER & Frédéric GASCHET & Guillaume POUYANNE & Stéphane VIROL, 2011. "Real Estate and Land Values on the shoreline: a transaction-level analysis (In French)," Cahiers du GREThA (2007-2019) 2011-07, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).

    More about this item

    Keywords

    Resource/Energy Economics and Policy;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:agreko:31732. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aeasaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.