Abstract
This study evaluated the implementation of a volumetric and cost-recovery pricing method for irrigation water under symmetric information conditions without the inclusion of implementation costs. The study was carried out in two steps. First, a cost function was estimated for irrigation water supplied by a water user association to a typical Mediterranean agricultural area, based on a translog function. Second, the economic impact of a pricing method designed according to this cost function was simulated using a mathematical programming territorial model for the same agricultural area. The outcomes were compared with those for the current pricing method. The impacts of this pricing method are discussed in terms of its neutral effects on total farm income and, conversely, the importance of the redistributive effects.
Highlights
Introduction(WFD) [1], the European Union National Associations of Water Suppliers and Waste Water Services issued a position paper [2] for development of a guideline on water service costs that should be recovered from water service users, and the extent to which water users should contribute to recovery of the costs of water service operators
In addition to the controversial interpretation of the European Water Framework Directive 60/2000 (WFD) [1], the European Union National Associations of Water Suppliers and Waste Water Services issued a position paper [2] for development of a guideline on water service costs that should be recovered from water service users, and the extent to which water users should contribute to recovery of the costs of water service operators
In this study we simulated the application of a hypothetical water policy in a Mediterranean agricultural area using basic principles of water pricing
Summary
(WFD) [1], the European Union National Associations of Water Suppliers and Waste Water Services issued a position paper [2] for development of a guideline on water service costs that should be recovered from water service users, and the extent to which water users should contribute to recovery of the costs of water service operators. Water 2014, 6 associated with water services, efficient water management, and water protection, in relation to its various forms and availability [3]. Economic analysis of irrigation water can: (i) inform sustainable water management; (ii) be used for implementing the WFD [4]; and (iii) identify possible problems in policy design. Recovery of the complete cost of water services by increasing irrigation payments could lead to problems in protecting the resource, as it would encourage farmers to use alternative water sources [5], including groundwater or rivers [6]. In the case of under-utilization of facilities for irrigation water supply, attaining full cost recovery involves fees calculated on the basis of average costs; this could result in fees much higher than marginal costs [7]
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