An ensemble experiment of mathematical programming models to assess socio-economic effects of agricultural water pricing reform in the Piedmont Region, Italy

Abstract

The Piedmont Region in NW Italy has recently deployed an ambitious and pioneering agricultural water pricing reform aimed at integrating and effectively enforcing EU's Water Framework Directive principles of cost recovery, polluter-pays and affordability. This paper develops a multi-model ensemble framework encompassing 5 mathematical programming models (2 Positive Mathematical Programming models, 2 Positive Multi-Attribute Utility Programming models and 1 Weighted Goal Programming model) that represent the observed behavior of socioeconomic agents to: 1) simulate the impacts of the Piedmontese water pricing reform on land use allocation and management, water conservation, profit and water tariff revenue; 2) sample modeling uncertainty through the ensemble spread; and 3) explore potential tipping points through use of scenario-discovery techniques. Our research suggests that the key challenge to the reform lies in the management of rice fields, an extensive (17% of the agricultural area), water-demanding and relatively low-added-value crop that nonetheless delivers significant ecosystem services (e.g. water retention) of historical and cultural relevance to the region. The ensemble experiment suggests that rice agriculture rapidly dwindles in the price range 0.012–0.074 EUR/m3 depending on the model. Before reaching this tipping point, agricultural water pricing can reduce withdrawals up to 1.7%–9.5%, while reducing profit between 4.9% and 5.6% and achieving a 57- to 65-fold increase in water tariff revenue.