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Substitution between water and other agricultural inputs: Implications for water conservation in a River Basin context


  • Cai, Ximing
  • Ringler, Claudia
  • You, Jiing-Yun


Substitution of irrigation water with other agricultural inputs could be an important means to conserve water in the face of growing pressures on water resources from both nonagricultural water demands and environmental water requirements. This paper discusses the potential of such substitution through an empirical analysis based on a multiple-input crop production function at the field and farm scales complemented with a numerical modeling exercise at the basin scale. Results from the crop production function analysis show that under both crop yield and net profit maximization, water is a substitute to other crop inputs for high-value crops, and is a complement to water for low-valued crops. At the basin scale, an integrated economic-hydrologic river basin model is used to analyze the role of other factors in crop input substitution, including the spatial connections among water sources and demands, hydro-agronomic conditions, and institutional settings for water allocation. Results show that in the case study area, the Maipo River basin in Chile, where water is very scarce, moving from the current, input-constrained, situation to full optimization of water resources leads to an increase in all crop inputs, including water. In that case, 301Â million m3 of additional water use results in additional net profits of USD 11Â million. However, if the water fee is raised by a factor of eight while overall basin irrigation profits are maintained at the original, baseline level, a reduction of water withdrawals by 326Â million m3 is traded off with costs of USD 43.2Â million for other inputs. Irrigation districts with a high share of low-value crops have a low potential for substituting water with other crop inputs. Therefore, investments for water substitution should also be kept low in these areas.

Suggested Citation

  • Cai, Ximing & Ringler, Claudia & You, Jiing-Yun, 2008. "Substitution between water and other agricultural inputs: Implications for water conservation in a River Basin context," Ecological Economics, Elsevier, vol. 66(1), pages 38-50, May.
  • Handle: RePEc:eee:ecolec:v:66:y:2008:i:1:p:38-50

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    References listed on IDEAS

    1. Rosegrant, M.W. & Ringler, C. & McKinney, Daene C. & Cai, X. & Keller, Andrew & Donoso, G., 2000. "Integrated economic-hydrologic water modeling at the basin scale: the Maipo river basin," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 24(1), December.
    2. Cai, Ximing & McKinney, Daene C. & Rosegrant, Mark W., 2003. "Sustainability analysis for irrigation water management in the Aral Sea region," Agricultural Systems, Elsevier, vol. 76(3), pages 1043-1066, June.
    3. David Stern, 2011. "Elasticities of substitution and complementarity," Journal of Productivity Analysis, Springer, vol. 36(1), pages 79-89, August.
    4. Arnaud Reynaud, 2003. "An Econometric Estimation of Industrial Water Demand in France," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 25(2), pages 213-232, June.
    5. Edwards, Brian K. & Howitt, Richard E. & Flaim, Silvio J., 1996. "Fuel, crop, and water substitution in irrigated agriculture," Resource and Energy Economics, Elsevier, vol. 18(3), pages 311-331, October.
    6. Cai, Ximing & Ringler, Claudia & Rosegrant, Mark W., 2006. "Modeling water resources management at the basin level: methodology and application to the Maipo River Basin," Research reports 149, International Food Policy Research Institute (IFPRI).
    7. Golan, Amos & Judge, George G. & Miller, Douglas, 1996. "Maximum Entropy Econometrics," Staff General Research Papers Archive 1488, Iowa State University, Department of Economics.
    8. Bartolini, F. & Bazzani, G.M. & Gallerani, V. & Raggi, M. & Viaggi, D., 2007. "The impact of water and agriculture policy scenarios on irrigated farming systems in Italy: An analysis based on farm level multi-attribute linear programming models," Agricultural Systems, Elsevier, vol. 93(1-3), pages 90-114, March.
    9. Ringler, Claudia & Vu Huy, Nguyen, 2004. "Water allocation policies for the Dong Nai River Basin in Vietnam: an integrated perspective," EPTD discussion papers 127, International Food Policy Research Institute (IFPRI).
    10. Howitt, Richard E. & Msangi, Siwa, 2002. "Reconstructing Disaggregate Production Functions," 2002 Annual meeting, July 28-31, Long Beach, CA 19585, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Y. Mundlak, 1968. "Elasticities of Substitution and the Theory of Derived Demand," Review of Economic Studies, Oxford University Press, vol. 35(2), pages 225-236.
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    Cited by:

    1. Qiuqiong Huang & Jinxia Wang & Scott Rozelle & Stephen Polasky & Yang Liu, 2013. "The Effects of Well Management and the Nature of the Aquifer on Groundwater Resources," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(1), pages 94-116.
    2. Samuel D. Zapata & Carlos E. Carpio, 2014. "The theoretical structure of producer willingness to pay estimates," Agricultural Economics, International Association of Agricultural Economists, vol. 45(5), pages 613-623, September.
    3. Feng Wu & Jinyan Zhan & Qian Zhang & Zhongxiao Sun & Zhan Wang, 2014. "Evaluating Impacts of Industrial Transformation on Water Consumption in the Heihe River Basin of Northwest China," Sustainability, MDPI, Open Access Journal, vol. 6(11), pages 1-14, November.
    4. Prakashan Veettil & Stijn Speelman & Guido Huylenbroeck, 2013. "Estimating the Impact of Water Pricing on Water Use Efficiency in Semi-arid Cropping System: An Application of Probabilistically Constrained Nonparametric Efficiency Analysis," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(1), pages 55-73, January.
    5. Brouwer, Roy & Hofkes, Marjan, 2008. "Integrated hydro-economic modelling: Approaches, key issues and future research directions," Ecological Economics, Elsevier, vol. 66(1), pages 16-22, May.
    6. March, Hug & Therond, Olivier & Leenhardt, Delphine, 2012. "Water futures: Reviewing water-scenario analyses through an original interpretative framework," Ecological Economics, Elsevier, vol. 82(C), pages 126-137.
    7. Speelman, Stijn & Buysse, Jeroen & Farolfi, Stefano & Frija, Aymen & D'Haese, Marijke & D'Haese, Luc, 2009. "Estimating the impacts of water pricing on smallholder irrigators in North West Province, South Africa," Agricultural Water Management, Elsevier, vol. 96(11), pages 1560-1566, November.
    8. repec:wsi:wepxxx:v:03:y:2017:i:01:n:s2382624x17500011 is not listed on IDEAS

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