Irrigation Water Resource in a Rice-Growing Area: Economic Evaluation under Different Pricing Conditions

Water scarcity is an increasing phenomenon affecting all sectors of economic interest. This problem is stressing agriculture as well, and in particular primary activities that use huge amounts of the resource to maintain their productions at sufficiently high levels. A way to contrast scarcity is the improvement of the efficiency of water allocation and the reduction of its losses, through the adoption of political instruments and pricing aimed to a more aware use of the resource itself. In this context, the Water Framework Directive, in order to assign an appropriate cost to irrigation water, urges member states to introduce the concept of full cost, and to apply a volumetric supply fee promoting the rationalization of the resource, thus playing a role in addressing emerging and future problems of water scarcity. However, several studies have already demonstrated through modeling approaches that these interventions could strongly affect farms’ choices and performances, resulting in consequences that would have repercussions on the whole agricultural system. The study aims to evaluate economic performances of farms in a typical rice-cultivated area in Lombardy, Northern Italy, under different supply tariff levels. A simple programming model has been used to run a scenario analysis. Structural features of farms, their productive inputs and performances are reported in current conditions, under different pricing and progressively increasing fee levels, in order to evaluate their effects on farms’ economic performances and operative strategies. The obtained results allow for a first identification of critical points in the water management of the area and hypothesize interventions for a better resource allocation, as a useful instrument for supporting future policies on water resources.