Effects of Water Availability and Policy Changes for Irrigated Agriculture

Abstract

Water conservation and its efficient use in agricultural production are a challenge that has to be addressed by the Mexican government. In this chapter we present our research results on two aspects of this problem related to water availability and water pricing. For our study we use a general equilibrium model applied to Mexico focused on agricultural and food production. Two policy options are evaluated based on the Mexican state’s ownership and distribution of water resources: the reduction of water for irrigation and the increase of water prices paid for this use. Our results show that the water pricing option is superior because the negative effect of this option on crop production and food security is lower than reducing the water supply for irrigated agriculture. This conclusion is reinforced by the possibility that the reduction in water for irrigation may come from climate change and not from policy changes, i.e., pricing water for irrigation might promote a more efficient use of the same by farmers.