A new methodology for assessing the impact of water-pricing scenarios: case study of small-scale irrigation schemes in South Africa
Worldwide growing water scarcity has increased the call for economic instruments to stimulate rational water use in agriculture. In addition cost-recovery is now widely accepted as a cornerstone of sustainable water management. As a consequence now in developing countries, where currently agricultural water use is often still heavily subsidized, a tendency exists of introducing water-pricing as a policy to achieve more sustainable water use. The exact impact of water pricing policies on irrigation water use or on the farmers’ production system is however mostly unknown. A new two-stage methodology that allows estimating at the farm level the effects of introducing or raising a water price on the agricultural production process and water demand is introduced in this study. The first stage comprises the construction of a technical efficiency frontier and the calculation of the technical and allocative efficiency levels of each farm. This representation of the technology is used in the second stage in a profit maximization model. As an example the method is applied to the case of small-scale irrigators in South Africa. It is shown that water demand of farmers is quite responsive even to small changes in the water price. Moreover, the introduction of a water price is shown to significantly decrease farm profit. This appears to be mainly a problem for the poorer farmers.
|Date of creation:||2008|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.eaae.org|
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Tim Coelli & Sanzidur Rahman & Colin Thirtle, 2002. "Technical, Allocative, Cost and Scale Efficiencies in Bangladesh Rice Cultivation: A Non-parametric Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(3), pages 607-626.
- Gomez-Limon, J. A. & Berbel, J., 2000. "Multicriteria analysis of derived water demand functions: a Spanish case study," Agricultural Systems, Elsevier, vol. 63(1), pages 49-72, January.
- Berbel, J. & Gomez-Limon, J. A., 2000. "The impact of water-pricing policy in Spain: an analysis of three irrigated areas," Agricultural Water Management, Elsevier, vol. 43(2), pages 219-238, March.
- Jonasson, Lars & Apland, Jeffrey, 1997. "Frontier Technology and Inefficiencies in Programming Sector Models: An Application to Swedish Agriculture," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 24(1), pages 109-31.
- Basil Manos & Thomas Bournaris & Mohd Kamruzzaman & Moss Begum & Ara Anjuman & Jason Papathanasiou, 2006. "Regional Impact of Irrigation Water Pricing in Greece under Alternative Scenarios of European Policy: A Multicriteria Analysis," Regional Studies, Taylor & Francis Journals, vol. 40(9), pages 1055-1068.
- 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).
- Gomez-Limon, Jose A. & Riesgo, Laura, 2004. "Irrigation water pricing: differential impacts on irrigated farms," Agricultural Economics, Blackwell, vol. 31(1), pages 47-66, July.
When requesting a correction, please mention this item's handle: RePEc:ags:eaae08:43836. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.