Do Water Rights Affect Technical Efficiency and Social Disparities of Crop Production in the Mediterranean? The Spanish Ebro Basin Evidence

Abstract

The coming agenda for the European Common Agricultural Policy includes more incentives for the environmental compliance of farmer’s activities. This will be particularly important in the case of water risk management in Mediterranean countries. Among the new challenges is the need to evaluate some of the instruments necessary to comply with the Water Framework Directive requirements that emphasize the management of water demand to achieve the environmental targets. Here we analyze the implications of changing water rights as a policy response to these challenges. We analyze two important aspects of the decision: (i) the effects on the crop productivity and efficiency and (ii) the effects on the rural income distribution. We provide the empirical estimations for the marginal effects on the two considered aspects. First, we calculate a stochastic frontier production function for five representative crops using historical data to estimate technical efficiency. Second, we use a decomposition of the Gini coefficient to estimate the impact of irrigation rights changes on yield disparity. In our estimates, we consider both bio-physical and socio-economic aspects to conclude that there are long term implications on both efficiency and social disparities. We find disparities in the adaptation strategies depending on the crop and the region analyzed.