Modelling Spot Water Markets Under Uncertain Water Supply

Water availability in semiarid regions usually exhibits patterns of extreme variability. Even in intensively controlled basins, some users are subject to low levels of water reliability, and more vulnerable to periods of extreme scarcity. To reduce their risk exposure more flexible instruments, such as voluntary exchanges of water among users, are required. Recent changes in the Spanish water Law have given an initial impulse to allow for leases of water use rights. Properly designed and monitored, this instrument provides some flexibility to water management, and may increase the economic use efficiency as well as mitigate the adverse economic effects of droughts. This paper looks at the risks and uncertainty dimensions of water markets, which have not been paid much attention in the literature. It analyses, from theoretical and empirical standpoints, the role that uncertainty plays in market participants' decisions and its impact on gains from trade. Two models have been developed to carry out the empirical application. One is a stochastic and two-stage discreet programming model which simulates irrigators behaviour and the other is a spatial equilibrium model to compute market exchange and equilibrium. Water market price endogeneity is solved by an iterative process, which characterise price uncertainty from the results obtained from the spatial equilibrium model. Hydrological risk is characterised at the irrigation farm level through the variation of the water allowances served for irrigation. The application is performed on eleven irrigated farms in a district of the Guadalquivir Valley (Southern Spain. It is shown how water availability uncertainty reduces farmers' benefits because of the fact that they must take ex-ante decisions. However, if market participation is allowed once water allowances become known, even at an uncertain price, the benefit losses are partly mitigated. From a methodological standpoint, these results suggest that the agricultural water market benefits estimates found in the literature may be undervalued as a result of omitting the option to participate in the market in the mix of possible strategies. Exchanging water in annual spot markets allows for the reduction of farmers' economic vulnerability caused by the variability and uncertainty of water supply within an irrigation season.uncertainty, farm modelling, water markets, water supply, Resource /Energy Economics and Policy,

Adoption of Soil Erosion Control Practices in Southern Spain Olive Groves

This paper presents results from a survey carried out in 2005 among 147 olive tree farmers from the Alto Genil River Basin in Southern Spain regarding the adoption of soil conservation and management practices. Olive tree groves in South-eastern Spain's mountainous areas are subject to a high risk of soil erosion and have to incur in high costs of soil conservation. This results in great difficulties to comply with cross-compliance and to benefit from agri-environmental schemes. Our main objectives are to analyse the current level of adoption of soil conservation practices and to analyse which socio-economic and institutional factors determine such adoption. Three Probit models are estimated. Dependant variables are three different soil conservation practices, namely tillage following contour lines, maintaining the rests of pruning on the ground, and non-tillage with weedicides.olive groves, soil erosion, soil conservation, cross compliance, Crop Production/Industries, Q12, Q24,

Economic valuation of water and «willingness to pay» analysis with repect to tropical fruit production in southeastern Spain

[ENG] This paper reports a survey of how 64 tropical fruit growers from the Granada coast of Spain use and value their water resources. This area produces crops of high added value. The agricultural demand for water is ever increasing and is much greater than the actual supply. This problem is worsened by the infiltration of seawater into the aquifers that provide most of the irrigation water for the area. Moreover, the population increases five-fold in the summer due to tourism, further aggravating the problem of water scarcity. Technical innovations, especially the reuse of urban wastewater, and economic solutions, namely increasing the price of water, have been proposed under the European Union Water Framework Directive. The main questions in the survey are described and the responses analysed. The productive, technological and resource management characteristics that determine the growers’ expressed willingness to pay for the water they use, as well as their attitude towards the use of alternative sources (such as residual water) are examined. Finally, the marginal product value of irrigation water in the area is calculated. [This paper reports a survey of how 64 tropical fruit growers from the Granada coast of Spain use and value their water resources. This area produces crops of high added value. The agricultural demand for water is ever increasing and is much greater than the actual supply. This problem is worsened by the infiltration of seawater into the aquifers that provide most of the irrigation water for the area. Moreover, the population increases five-fold in the summer due to tourism, further aggravating the problem of water scarcity. Technical innovations, especially the reuse of urban wastewater, and economic solutions, namely increasing the price of water, have been proposed under the European Union Water Framework Directive. The main questions in the survey are described and the responses analysed. The productive, technological and resource management characteristics that determine the growers’ expressed willingness to pay for the water they use, as well as their attitude towards the use of alternative sources (such as residual water) are examined. Finally, the marginal product value of irrigation water in the area is calculated. [ESP] El presente artículo expone algunos resultados de una encuesta realizada a 64 explotaciones de fruticultura tropical de la costa tropical de Granada sobre el uso y valoración de los recursos hídricos de que disponen. Se trata de una zona de cultivos con un gran valor añadido, en la que la demanda agrícola de agua es creciente y muy superior a la oferta. Esta situación se ve agravada por problemas de intrusión marina en el acuífero del que se surte principalmente la zona, con la consiguiente degradación de la calidad en el agua de riego. Además, la población se quintuplica en verano por el turismo, lo que agudiza el problema. Se han planteado tanto soluciones técnicas (especialmente el uso de aguas residuales depuradas de origen urbano), como soluciones de naturaleza económica (básicamente incrementos del precio del agua), de acuerdo con lo establecido en la Directiva Marco de la Unión Europea. En primer lugar se presenta un análisis descriptivo de las respuestas más importantes de los agricultores a la encuesta. A continuación se estudia qué características productivas, tecnológicas y de gestión de recursos en las explotaciones determinan una mayor disposición expresada por los agricultores a pagar por el agua actualmente utilizada, así como su actitud ante el uso de fuentes alternativas tales como las aguas residuales. Finalmente se calcula el valor del producto marginal del agua de riego.This work was performed as part of INIA Project SC99-06

Modelling spot water markets under uncertain water supply

Water availability in semiarid regions usually exhibits patterns of extreme variability. Even in intensively controlled basins, some users are subject to low levels of water reliability, and more vulnerable to periods of extreme scarcity. To reduce their risk exposure more flexible instruments, such as voluntary exchanges of water among users, are required. Recent changes in the Spanish water Law have given an initial impulse to allow for leases of water use rights. Properly designed and monitored, this instrument provides some flexibility to water management, and may increase the economic use efficiency as well as mitigate the adverse economic effects of droughts. This paper looks at the risks and uncertainty dimensions of water markets, which have not been paid much attention in the literature. It analyses, from theoretical and empirical standpoints, the role that uncertainty plays in market participants’ decisions and its impact on gains from trade. Two models have been developed to carry out the empirical application. One is a stochastic and two-stage discreet programming model which simulates irrigators behaviour and the other is a spatial equilibrium model to compute market exchange and equilibrium. Water market price endogeneity is solved by an iterative process, which characterise price uncertainty from the results obtained from the spatial equilibrium model. Hydrological risk is characterised at the irrigation farm level through the variation of the water allowances served for irrigation. The application is performed on eleven irrigated farms in a district of the Guadalquivir Valley (Southern Spain). It is shown how water availability uncertainty reduces farmers’ benefits because of the fact that they must take ex – ante decisions. However, if market participation is allowed once water allowances become known, even at an uncertain price, the benefit losses are partly mitigated. From a methodological standpoint, these results suggest that the agricultural water market benefits estimates found in the literature may be undervalued as a result of omitting the option to participate in the market in the mix of possible strategies. Exchanging water in annual spot markets allows for the reduction of farmers’ economic vulnerability caused by the variability and uncertainty of water supply within an irrigation season

Economic analysis of alternatives for eliminating aquifer overdraft in the Segura basin

Aquifer overdraft is a major environmental and water management problem in Southeast Spain. In some coastal areas, the recent development of desalinisation provides an opportunity to address this problem at a lower social and economic cost. We analyse the economic impact of using several instruments to address this problem in the Alto Guadalentín aquifer: a tax on groundwater pumping, the buyback of groundwater rights and the subsidization of desalinised resources. Their impact is assessed using a mathematical programming model that maximises the farm net margin resulting from the use of the available water resources for irrigation in the area. Our results show that all the alternatives have significant economic impacts, although the availability of desalinised water significantly reduces them. Whereas the outright restriction of non‐renewable pumping and an environmental tax have the lowest budgetary cost, they are very unpopular and rather politically unfeasible. Although more expensive for the public budget, purchasing water rights and subsidising desalinised water in exchange for reducing groundwater pumping have the same impact on the agricultural sector, but are likely to be much better received by farmers. Moreover, the former permanently solves the problem.The authors thank the Spanish National Institute for Agricultural and Food Research and Technology (INIA) and FEDER (Fondo Europeo de Desarrollo Regional) for their support through the research project RTA2010‐00109‐C04‐03

Adopción y difusión de prácticas de no laboreo en el olivar de la provincia de Granada

En este trabajo se analiza el proceso de adopción del no laboreo en el olivar de la provincia de Granada utilizando información procedente de un sondeo realizado en 2005-2006 a 215 olivicultores. Se analiza en primer lugar el proceso de difusión agregada de las prácticas de no laboreo realizadas en la zona mediante la estimación de varios modelos de difusión temporal. A continuación se identifican, mediante la estimación de dos modelos probit, algunos factores que influyen en la adopción de dichas prácticas. Los resultados obtenidos muestran cómo las prácticas de no laboreo son realizadas por el 90% de los agricultores. Su difusión ha sido intensa desde mediados de los noventa, predominando el efecto imitación, basado en la interacción entre los agricultores de la zona, sobre otros factores externos. Algunos factores que influyen en la adopción de las diferentes prácticas de no laboreo son el regadío, la continuidad familiar de la explotación o la percepción que tiene el agricultor del problema de la erosión.Erosión, no laboreo, olivar, adopción de tecnologías, difusión de tecnologías., Agricultural and Food Policy, Q12, Q24, C50.,

Analysis of the adoption of irrigation technologies under uncertain water availability

This paper analyses the adoption process of water-conserving irrigation technologies by a risk averse farmer in a context of uncertain water availability. Firstly, it is analytically shown that the increase in water efficiency that the new technology allows results in a decrease in the cost of the effective irrigation water applied, as well as in an increase in both effective water applied and crop production. It is also concluded that the optimal amount of irrigation water applied depends on individual risk preferences of the producer, on the variance and asymmetry of the cost of water applied, and on the elasticity of the marginal productivity of the effective water applied. Lastly, it is theoretically shown that an increase in the level of uncertainty regarding water availability incentives the adoption of modern irrigation technologies only if this allows for a reduction in the amount of water applied

Uso del agua en la fruticultura tropical del sureste español: un análisis de la disposición al pago

El presente trabajo expone algunos resultados de una encuesta realizada a 64 explotaciones de fruticultura tropical del municipio granadino de Almuñecar sobre su uso y valoración de los recursos hídricos de que disponen. Se trata de una zona de cultivos con un gran valor añadido, en la que la demanda agrícola de agua es creciente y muy superior a la oferta, situación que se ve agravada por problemas de intrusión marina en el acuífero del que se surte la zona regable, con los consiguientes problemas de calidad en el agua de riego. Además, el municipio de Almuñecar quintuplica en verano su población por el turismo, lo que agudiza el problema. Se han planteado tanto soluciones técnicas, especialmente el uso de aguas residuales depuradas de origen urbano, como soluciones de naturaleza económica, básicamente incrementos del precio del agua, de acuerdo con lo establecido en la Directiva Marco de la Unión Europea. El objetivo de la investigación, de la que se presentan resultados preliminares, es estudiar qué características productivas, tecnológicas y de gestión del recurso en las explotaciones, determinan una mayor disposición expresada por los agricultores a pagar por el agua actualmente utilizada, así como su actitud ante el uso de fuentes alternativas tales como las aguas residuales. Finalmente se analiza el valor del ingreso marginal teórico del agua para los regantes

Adoption of Soil Conservation Practices in Olive Groves: The Case of Spanish Mountainous Areas

This paper presents some results from a survey carried out in 2004 among 223 olive tree farmers from mountainous areas in the Spanish Southern provinces of Granada and Jaen regarding the adoption of soil conservation and management practices. Olive tree groves in mountainous areas are subject to a high risk of soil erosion and have to incur in higher costs of soil conservation. This results in greater difficulties to comply with cross-compliance and to benefit from agri-environmental schemes. Our main objectives are to analyse the current level of adoption of soil conservation practices and to analyse which socio-economic and institutional factors determine such adoption. Three Probit models are estimated. Dependant variables are three different soil conservation practices, namely tillage following contour lines, maintenance of terraces with stonewalls, and non-tillage with weedicides.olive groves, soil conservation, technology adoption, Resource /Energy Economics and Policy, Q12, Q24,

Eficiencia productiva y adopción de tecnologías en invernaderos almerienses

El sistema hortícola almeriense con sus más de 25.000 hectáreas, en las que se producen entre 2.5 y 3 millones de Tm de hortalizas tempranas, valoradas en más de 250.000 millones de pesetas, es un sistema productivo muy dinámico, basado en explotaciones familiares, con alto grado de receptividad tecnológica, y sometido a un nivel creciente de competitividad en los mercados para sus productos. En estas circunstancias, en las que gestionar el proceso productivo y comercial de la forma más eficiente es la clave cualquier análisis que aporte información sobre la eficiencia de las explotaciones hortícolas resulta de interés. En la presente comunicación, partiendo de información proveniente de un seguimiento contable, correspondiente a la campaña 1996/97, de 78 invernaderos de la costa almeriense, se lleva a cabo un análisis econométrico de la eficiencia mediante el uso de funciones frontera estocásticas bajo distintos supuestos de distribución de los términos de error, obteniéndose índices de eficiencia para las empresas de la muestra. A continuación se analiza la relación de los índices de eficiencia con algunas características tecnológicas y de gestión de los invernaderos, lo que permite, finalmente proponer algunas estrategias para mejorar la eficiencia en el sistema