The potential impact of markets for irrigation water in Italy and Spain: a comparison of two study areas*

Abstract

The viability of irrigated systems in Southern Europe is closely linked to efficient institutional settings and water-allocation mechanisms. A significant, although not widely used, mechanism for water allocation is an intra-sectorial water market. The objective of this paper is to evaluate to what extent water markets may contribute to the improvement of the efficiency of water allocation and to the profitability of irrigated agriculture. The related issues of water allocation among farm types and farm specialisation are also addressed. The analysis is based on a basin-level linear programming model, comparing the situation with and without a market. It includes both fixed and variable transaction costs and estimates their combined effects on market performances. The model is applied in two areas in Southern Italy and Spain, and simulates the behaviour of different farm types, derived from cluster analysis on a sample of farms in each area. The paper confirms that water markets could potentially improve the economic efficiency of water use, in terms of higher profit per hectare, given limited water availability. The potential improvements are associated with a more intense specialisation of farms and are strongly differentiated among farmers, particularly where significant restrictions to water availability occur. This corroborates the expectations of institutional difficulties in implementing water markets. However, the exchanges, and consequently the potential effects of water markets, are heavily affected by the actual level of water availability, as well as the size and the structure (fixed vs. proportional) of transaction costs. The paper calls for a more in-depth analysis of the connections between market performances and institutional settings, as related to the issue of water-agriculture policy design and coordination.

Analysis of Stakeholders’ Attitudes towards Water Markets in Southern Spain

“…For instance, efficiency gains from reallocations via water markets were assessed by Jaeger [8] for the Upper Klamath Basin in Oregon, and by Rosegrant et al [9] for the Maipo River Basin, while Hadjigeorgalis [10] and Zegarra [11] did the same in Chile, and Carey et al [12], Carey and Zilberman [13] and Murphy et al [14] in California. Qureshi et al [15] included administrative and financial barriers in their mathematical model for the Murray-Darling basin in Australia, while Pujol [16] based on the farmers' preferences, added limits to profit-maximizing behaviour in implementing a model in different irrigated areas of Spain and Italy. Martínez and Goetz [17] provide another example of a mathematical model used to simulate water market mechanisms in agriculture in Spain, while the issue has also been studied there using Multi Criteria Analysis [18,19].…”

A DSS for sustainable development and environmental protection of agricultural regions

“…Sumpsi et al (1993Sumpsi et al ( , 1997 and Amador et al (1998) consider this methodology suitable and efficient for the analysis of decision making and the simulation of agricultural systems based upon multicriteria techniques applied to agriculture. This methodology has been successfully implemented on real agricultural systems (Bartolini et al 2007a Manos et al 2004aManos et al , b, c, 2006Pujol et al 2006). We employed this methodology to estimate a surrogate utility function in order to simulate farmers' decision-making processes.…”

Revisión de casos internacionales del desempeño de los mercados del agua como punto de referencia a su posible implementación en Colombia

“…El estudio se realizó específicamen-te en Foggia, Sur de Italia, país que no cuenta con una regulación clara respecto al intercambio de derechos de agua, y en Cataluña, España, donde, por el contrario, dichas transacciones están claramente reglamentadas. A través de la simulación de la asignación óptima del agua entre las diferentes granjas, asumiendo la maximización del beneficio, los autores demostraron que, gracias a la implementación de dicho instrumento, los agricultores ahorran en costos de riego, viéndo-se beneficiados por una mayor ganancia, la cual en Cataluña consistiría de un incremento máximo del 30% y en Foggia máximo del 10% (Pujol, Raggi, & Viaggi, 2006).…”