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Price induced water irrigation: Unraveling conflicts and synergies between European agricultural and water policies

Author

Listed:
  • Athanasios Kampas

    () (Agricultural Economics and Rural Development Department, Agricultural University of Athens)

  • Athanasios Petsakos

    () (Agricultural Economics and Rural Development Department, Agricultural University of Athens)

  • Stelios Rozakis

    () (Agricultural Economics and Rural Development Department, Agricultural University of Athens)

Abstract

The 2003 CAP reform considerably affects cropping patterns in European agriculture. At the same time the imperatives of the forthcoming Water Framework Directive (WFD) is expected to modify irrigation decisions especially in Southern Europe where irrigated agriculture utilizes about 70-80% of total water. This paper examines the combined effect of CAP reform and the application of likely volumetric water pricing on water demand by taking into account three drivers of change, namely extensive margin changes, intensive margin changes and irrigation technology shift. For low rates of water prices, CAP reform contradicts the WFD objectives since it leads to cropping patterns that consume more water resources. On the contrary, as water prices increase, decoupling and water pricing display a synergistic effect on water conservation. Finally, decoupling substantially increases the efficiency of water pricing in terms of water conservation. As a result, the post CAP reform regime clearly dominates the prior CAP reform regime when an index of value for money water conservation is examined.

Suggested Citation

  • Athanasios Kampas & Athanasios Petsakos & Stelios Rozakis, 2010. "Price induced water irrigation: Unraveling conflicts and synergies between European agricultural and water policies," Working Papers 2010-05, Agricultural University of Athens, Department Of Agricultural Economics.
  • Handle: RePEc:aua:wpaper:2010-05
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    File URL: http://aoatools.aua.gr/RePEc/aua/wpaper/files/2010_5_kampas.pdf
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    References listed on IDEAS

    as
    1. José A. Gómez-Limón & Manuel Arriaza & Julio Berbel, 2002. "Conflicting Implementation of Agricultural and Water Policies in Irrigated Areas in the EU," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(2), pages 259-281.
    2. Guindé, Loïc & Millet, Guy & Rozakis, Stelios & Sourie, Jean-Claude & Tréguer, David, 2005. "The CAP Mid-Term Reform Impacts to French Cereal-Oriented Farms," 89th Seminar, February 2-5, 2005, Parma, Italy 232607, European Association of Agricultural Economists.
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    More about this item

    Keywords

    irrigation; bio-economic modeling; mathematical programming; policy analysis; price endogenous model; water demand; CAP reform; WFD;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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