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The Impact of Pricing Policies on Irrigation Water for Agro-Food Farms in Ecuador

Author

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  • Christian Franco-Crespo

    () (Center for Studies and Research for Agricultural and Environmental Risk Management (CEIGRAM), Technical University of Madrid, 28040 Madrid, Spain)

  • Jose Maria Sumpsi Viñas

    () (Center for Studies and Research for Agricultural and Environmental Risk Management (CEIGRAM), Technical University of Madrid, 28040 Madrid, Spain)

Abstract

The institutional reform of the State established in Ecuador during the last decade has aimed at regaining control of specific sectors such as the consumptive use of water. Since 2014, regulation, consumption, and use of water, especially in agriculture, have been analyzed through policies and fiscal instruments. This research presents itself in the context of the simulation of scenarios using positive mathematical programming, to analyze the economic impact of pricing policies on agro-food farms. Policies of fixed costs, water blocks, and volumetric prices are evaluated. The results show that the existing fixed costs do not reduce water consumption. In contrast, the scenarios of water blocks and volumetric prices impact on the behavior of farmers. The tendency of water consumption to the application of volumetric prices demonstrates that banana farms have a greater tolerance to the increase of water costs. On the other hand, the response to an increase in cost in the case of cacao, sugar cane, and rice depends on the productivity of farmers. The negative effects can lead to the abandonment of agriculture. Thus, volumetric policies are more efficient in reducing water consumption as well as in recovering the costs of the irrigation system.

Suggested Citation

  • Christian Franco-Crespo & Jose Maria Sumpsi Viñas, 2017. "The Impact of Pricing Policies on Irrigation Water for Agro-Food Farms in Ecuador," Sustainability, MDPI, Open Access Journal, vol. 9(9), pages 1-18, August.
  • Handle: RePEc:gam:jsusta:v:9:y:2017:i:9:p:1515-:d:109866
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    References listed on IDEAS

    as
    1. Shah, Tushaar & Ul Hassan, Mehmood & Khattak, Muhammad Zubair & Banerjee, Parth Sarthi & Singh, O.P. & Rehman, Saeed Ur, 2009. "Is Irrigation Water Free? A Reality Check in the Indo-Gangetic Basin," World Development, Elsevier, vol. 37(2), pages 422-434, February.
    2. Dono, Gabriele & Giraldo, Luca & Severini, Simone, 2010. "Pricing of irrigation water under alternative charging methods: Possible shortcomings of a volumetric approach," Agricultural Water Management, Elsevier, vol. 97(11), pages 1795-1805, November.
    3. Huang, Qiuqiong & Rozelle, Scott & Howitt, Richard E. & Wang, Jinxia & Huang, Jikun, 2006. "Irrigation Water Pricing Policy in China," 2006 Annual meeting, July 23-26, Long Beach, CA 21241, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Kamel Louhichi & Sergio Gomez y Paloma & Hatem Belhouchette & Thomas Allen & Jacques Fabre & María Blanco Fonseca & Roza Chenoune & Szvetlana Acs & Guillermo Flichman, 2013. "Modelling Agri-Food Policy Impact at Farm-household Level in Developing Countries (FSSIM-Dev): Application to Sierra Leone," JRC Working Papers JRC80707, Joint Research Centre (Seville site).
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    More about this item

    Keywords

    agricultural policy; economic impact; irrigated agriculture; water consumption; PMP;

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • 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
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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