Worldwide growing water scarcity has increased the call for economic instruments to stimulate rational water use in agriculture. In addition costrecovery 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 farmersâ¿¿ 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.
|Publication status||Published - 2008|
|Event||People, Food and Environments: Global Trends and European Strategie - |
Duration: 26 Aug 2008 → 29 Aug 2008
|Conference||People, Food and Environments: Global Trends and European Strategie|
|Period||26/08/08 → 29/08/08|