Integrating agricultural policies and water policies under water supply and climate uncertainty

Abstract

Understanding the interactions of water and agricultural policies is crucial for achieving an efficient management of water resources. In the EU, agricultural and environmental policies are seeking to converge progressively toward mutually compatible objectives and, in this context, the recently reformed Common Agricultural Policy (CAP) and the EU Water Framework Directive constitute the policy framework in which irrigated agriculture and hence water use will evolve. In fact, one of the measures of the European Water Directive is to establish a water pricing policy for improving water use and attaining a more efficient water allocation. The aim of this research is to investigate the irrigators' responses to these changing policy developments in a self‐managed irrigation district in southern Spain. A stochastic programming model has been developed to estimate farmers' response to the application of water pricing policies in different agricultural policy scenarios when water availability is subject to varying climate conditions and water storage capacity in the district's reservoir. Results show that irrigators are price‐responsive, but a similar water‐pricing policy in different agricultural policy options could have distinct effects on water use, farmers' income, and collected revenue by the water authority. Water availability is a critical factor, and pricing policies are less effective for reducing water consumption in drought years. Thus there is a need to integrate the objectives of water policies within the objectives of the CAP programs to avoid distortion effects and to seek synergy between these two policies.