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Using Water Allocation in Israel as a Proxy for Imputing the Value of Agricultural Amenities

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  • Yerushalmi, Erez

Abstract

This paper uses the water allocation economy in Israel as a proxy for imputing the value of agricultural amenities. A general equilibrium model is developed, and incorporates agricultural amenities as byproducts of agricultural production, water trade channels, and multiple water types. The premise is that until a decade ago, water policy in Israel was interlinked with agricultural land-use policy. Integrating a Monte-Carlo analysis, the model searches for a baseline minimum value of agricultural amenity that makes household, in the counterfactual scenario, indifferent between the administrative and market mechanisms. The minimum imputed value is around 109% agricultural output. The intuition is that the gains in economic welfare, from improved water use efficiency, are offset by the losses in social welfare due to a reduction in available agricultural amenities.

Suggested Citation

  • Yerushalmi, Erez, 2018. "Using Water Allocation in Israel as a Proxy for Imputing the Value of Agricultural Amenities," Ecological Economics, Elsevier, vol. 149(C), pages 12-20.
  • Handle: RePEc:eee:ecolec:v:149:y:2018:i:c:p:12-20
    DOI: 10.1016/j.ecolecon.2018.02.005
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    More about this item

    Keywords

    Agricultural amenities; Administrative water allocation; Water market; General equilibrium; Israel;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • 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
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy

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