Impacts of Reduced Water Availability on Lower Murray Irrigation, Australia

This article evaluates irrigated agriculture sector response and resultant economic impacts of climate change for a part of the Murray Darling Basin in Australia. A water balance model is used to predict reduced basin inflows for mild, moderate and severe climate change scenarios involving 10, 20, 40 Celcius warming, and predict 13%, 38% and 63% reduced inflows. Impact on irrigated agricultural production and profitability are estimated with a mathematical programming model using a two-stage approach that simultaneously estimates short and long-run adjustments. The model accounts for a range of adaptive responses including: deficit irrigation, temporarily fallowing some areas, and permanently reducing irrigated area and changing the mix of crops. The results suggest that relatively low cost adaptation strategies are available for moderate reduction in water availability and thus costs of such reduction are likely to be relatively small. In more severe climate change scenarios greater costs are estimated, adaptations predicted include a reduction in total area irrigated, investments in efficient irrigation, and a shift away from perennial to annual crops as the latter can be managed more profitably when water allocations in some years are very low.water availability, irrigation, Murray Darling Basin, climate change

Development strategy for the irrigation sector of Sri Lanka 2006-2016

Irrigation management / Development plans / Policy / Operations / Maintenance / Rehabilitation / Investment planning / Watersheds / Institutional development / Sri Lanka / Mahaweli Project

Water: the world's most valuable asset

The lecture starts with an historic overview of recognising water as an economic good and trends that affect water availability and water consumption. Then it is discussed what makes water so special and what the implications are for economics. Finally , future research directions for the chair are presented

Optimal Exploitation of Groundwater and the Potential for a Tradable Permit System in Irrigated Agriculture

A great challenge facing future agricultural water policy is to explore the potential for transition from the current myopic competitive (common) exploitation of groundwater resources to a long-term efficient and sustainable allocation. A number of economic and/or command and control instruments can be used by the relevant water authority in order to deal with the economic and environmental problems generated by competitive exploitation. However, according to previous experience in both developed and developing countries, tradable permits seem as one of the most effective and efficient instruments, especially under conditions of limited water availability. On this account, the aim of the current study is to explore the feasibility and implementation of a tradable permit system in irrigated agriculture. To this end, two distinct optimization models are applied and compared: (a) an individual farmer’s model (representing the myopic non-cooperative exploitation of groundwater) and (b) a social planner’s model (representing the cooperative and sustainable allocation). The deviation of their results shows the rationale for using a tradable permit system, while the final allocation of the social planner’s model, solved as an optimal control problem that maximizes the social welfare under specific water policy objectives, denotes the equilibrium state of this system. The two models are then applied in a typical rural area of Greece where groundwater is the only source of irrigated agriculture. The derived time paths for water consumption and water availability illustrate the significant environmental benefits from the future implementation of a tradable permit system.Tradable Water Permits, Sustainable Water Use, Irrigated Agriculture

PLOT SIZE AND MAIZE PRODUCTIVITY IN ZAMBIA: THE INVERSE RELATIONSHIP RE-EXAMINED

Agricultural productivity is known to decline with farm size in many developing countries. This may be a result of market imperfections, such as missing rural labor markets. On the other hand, there may be economies of scale in farming, due, for instance, to the importance of lumpy inputs. Hence, it is not theoretically obvious that the inverse relationship prevails in all situations. Indeed, several studies found non-monotonic relationships between productivity and farm size, with productivity decreasing with size up to a certain size and increasing beyond that point. This paper examines the relationship between Maize productivity and plot size in Zambia. If offers a unique empirical approach. First, it focuses on Maize, which is the major crop on small and medium size farms in Zambia, but also accounts for the endogenous determination of the size of the plot devoted to Maize. Previous studies used total farm size or harvested area. Second, it corrects for selectivity into Maize cultivation. Third, it controls for differences in land quality and weather conditions across districts. Finally, it offers a structural interpretation of the above framework by modeling farm decisions in two recursive stages, where land is first allocated to the different crops based on the information set of the farmers at the time of planting, and the yield is affected by subsequent application of inputs, the quantities of which may depend on additional information that is revealed after planting. We use this recursive structure and the differences in the information sets over time to identify the model. The results show that the endogeneity of plot size is very important in this analysis. When considering plot size as an exogenous explanatory variable, we find a monotonic positive relationship between the yield of Maize and plot size, indicating that economies of scale are dominant throughout the plot size distribution. However, when we correct for the endogeneity of plot size, we find that the inverse relationship dominates the economies of scale in all plots up to 3 hectares, which constitute 86% of our sample. These results suggest that market imperfections should be targeted by any policy aimed at increasing Maize productivity in Zambia.Maize Yield, Plot Size, Inverse Relationship, Recursive Decisions, Two-stage Estimation, Two-sided Tobit, Selectivity Correction, Crop Production/Industries, O1 (Economic Development), Q1 (Agriculture).,

Sustainable Agriculture and Rural Livelihoods: A Synthesis

Agricultural and Food Policy,

Modelling the CAP Reform at the Regional Level with ProLand

The reform of the European Common Agricultural Policy (CAP) will fundamentally affect the decision behaviour of land users. So far transfer payments were coupled to specific forms of land use. The reform encourages land users to make decisions concerning production based solely on market aspects. The effects of the CAP reform on the Lahn Dill region in Germany are simulated with the spatially explicit land use model ProLand. The results show that land use decisions will be based stronger on site specific natural conditions than was the case in the Agenda 2000 scenario. The transfer payment volume directed into the region increases considerably.modelling, decision support, land use, spatially explicit, Agricultural and Food Policy, Q01,

Continuity and change: land and water use reforms in rural Uzbekistan. Socio-economic and legal analyses for the region Khorezm

Decades of Soviet rule have left a heritage of environmental and social problems in Central Asia. The demise of an entire ecosystem at unprecedented pace, the 'Aral Sea Syndrome', is the most prominent of the undesired outcomes of the focus on agricultural production that has dominated land and resource use and continues till today. The international outcry over this ecological crisis has delegated other - and maybe more urgent - problems to a second pane. Rural livelihoods are rapidly deteriorating, unemployment is high, and rural poverty widespread. Ecological aspects, although strongly affecting everyday life in rural areas - such as water and soil salinity and environmental pollution - are not the fore most concern to the local population, as the economic survival is the more pressing need. Nevertheless, it is exactly in this situation where the larger part of the population exploits the natural resources further rather than preserving the ecological basis as a natural means of the local land’s productivity. Table of contents: Preface and acknowledgements; Peter Wehrheim, Anja Schoeller-Schletter, Christopher Martius. Chapter 1: Farmers, cotton, water, and models - Introduction and overview; Peter Wehrheim, Christopher Martius. Chapter 2: Organizing agricultural production - Law and legal forms in transition; Anja Schoeller-Schletter. Chapter 3: A model-based analysis of land and water use reforms in Khorezm: Effects on different types of agricultural producers; Nodir Djanibekov. Chapter 4: Optimal crop allocation and consequent ecological benefits in large scale (shirkat) farms in Uzbekistan's transition process; Ihtiyor Bobojonov, Inna Rudenko, John P. A. Lamers. Chapter 5: Where has all the water gone? Marc Müller. Chapter 6: Analysis of water use and allocation for the Khorezm region in Uzbekistan using an integrated economic-hydrologic model; Tina Schieder, Ximing Cai. Chapter 7: Problems and perspectives of water user associations in Uzbekistan; Darya Hirsch (Zavgorodnyaya). Chapter 8: Barriers to technological change and agrarian reform in Khorezm, Uzbekistan; Caleb Wall. Chapter 9: Analysis of agricultural markets in Khorezm, Uzbekistan; Ihtiyor Bobojonov, John P. A. Lamers. Chapter 10: Cotton, agriculture, and the Uzbek government; Marc Müller --

Agricultural water markets: exploring limits and opportunities in Italy and Spain

Agriculture is the main water-using sector in Southern European Countries, such as Spain and Italy. Innovative institutional solutions for reducing water use or increasing its efficiency are pursued by recent legislation concerning water, in particular by the Water Framework Directive (WFD). Even if not explicitly considered by the directive, water markets may be seen as a kind of instrument responding to the guiding principles of the upcoming water regulation. The issue of water markets is very much debated in the water economics literature and particularly in the agricultural water literature. Water markets refer to a mechanism of water allocation based on the exchange of rights on water use. Water markets are proposed and supported by economic theory on the ground that they produce an efficient allocation of water resources. Criticisms to water markets may derive both on the ground of economic efficiency itself (for example due to higher transaction costs and expenditure for wider water transport systems) and on equity considerations (for example the concentration of water on the more efficient farms that would specialise in intensive production, while the others would retain less intensive crops). The objective of this paper is to test to what extent water markets may contribute to the improvement of the efficiency of water use. The analysis is based on a linear programming model applied at basin level, comparing the situation with and without market and including transaction costs proportional to the amount of water exchanged. The model simulates the behaviour of different farm types, derived from cluster analysis on a sample of farms in each area. The model is tested in two areas in Southern Italy and Spain. The paper confirms that water markets have the possibility to improve water use efficiency. However, the exchanges are very much affected by the amount of transaction costs, even for transaction costs relatively low. In the case of Lower Ter, gross margin increase due to markets may be as high as 30% which is rather a considerable amount. Instead, the highest increase in Foggia is only about 10%, a result that may be regarded as hardly relevant. In Foggia the benefits of the water market collapse only when transaction costs are between 0,1 and 0,2 EUR/m3 (that may be regarded as a fairly high amount). On the contrary, Lower Ter is more sensitive to transaction costs and 0,075 EUR/m3 are enough to cause the market to shut down whatever the water quota. When potential improvements occur, an additional issue arises, i.e. the institutional acceptance of market criteria for water allocation purposes. The general attitude in Europe still appears against such a solution. However, the changing economic context (agricultural markets, demographic trends) tend to decrease rigidities about water exchange, particularly among farmers.Water, Irrigation, Agriculture, Water markets, Water policy, Mathematical programming

The role of water markets in climate change adaptation

Abstract Water markets were first introduced in Australia in the 1980s, and water entitlement and allocation trade have been increasingly adopted by both private individuals and government.Irrigators turned to water markets (particularly for allocation water) to manage water scarcity and Governments to acquire water for the environment (particularly water entitlements. It is expected that further adoption of water markets will be essential for coping with future climate change impacts. This report reviews the available literature related to the relationship between southern Murray-Darling Basin (sMDB) water markets and anticipated climate change effects; the economic, social and environmental impacts of water reallocation through markets; and future development requirements to enhance positive outcomes in these areas. The use of water markets by irrigators can involve both transformational (selling all water entitlements and relocating or switching to dryland) and incremental (e.g. buying water allocations/entitlements, using carry-over, changing water management techniques) adaptation to climate change. Barriers to both adaptations include: current and future climate uncertainty; poor (or non-existent) market signals; financial constraints; information barriers; mental processing limits; inherent attitudes toward or beliefs about climate change; institutional barriers and disincentives to adapt. A better understanding of trade behaviour, especially strategic trade issues that can lead to market failures, will improve the economic advantages of water trade. There remains community concerns about the impacts of transfers away from regional areas such as reduced community spending and reinvestment; population losses; loss of jobs; declining taxation base, loss of local services and businesses, regional production changes; and legacy issues for remaining farmers. However, it is hard to disentangle these impacts from those caused by ongoing structural change in agriculture. Rural communities that are most vulnerable to water scarcity under climate change and water trade adjustment include smaller irrigation-dependent towns. Communities less dependent on irrigation are better able to adapt. Further, where environmental managers use water markets to deal with water variability and to ensure ecological benefits, irrigators are concerned about its impact on their traditional use of markets to manage scarcity. Climate change and water scarcity management are intertwined, suggesting that policy, institutional and governance arrangements to deal with such issues should be similarly structured. Water users will adapt, either out of necessity or opportunity. The cost of that adaptation at individual, regional and national levels—particularly to future water supply variability—can be mitigated by the consideration of the existing advantages from future opportunities for water marketing in Australia