Water Demand Curves Research Articles

Irrigation water pricing between governmental policies and farmers' perception : implications for green-houses horticultural production in Teboulba (Tunisia)

A positive mathematical programming model was constructed in this study to assess the effect of three water pricing scenarios (willingness to pay, full cost recovery and intermediate prices) on Teboulba’s agricultural production systems. This region is known by its horticultural production conducted under green-houses. The effects of these scenarios were estimated for three groups of farmers from three irrigated districts. Results show that water demand in group 1 remains inelastic until achieving the price of 0.20 TND. A price above this level decreases water consumption, farmer’s incomes as well as seasonal labor demand. For groups 2 and 3, the water demand curves remain highly inelastic even with a full cost recovery price. However, once reaching this last price, the model shows important income reductions reaching 20% of the current observed income. Moreover, a pricing policy aiming to recover O&M costs and which will be implemented independently from other economic, social and environmental measures can threaten the sustainability of the production systems in the region.

Water price elasticity and public acceptability on conservation options in the city of Volos, Greece

Efforts to satisfy increasing demand have often been concentrated principally on constructing new water systems, thus increasing the supply of water. The relationship between water abstraction and water availability has turned into a major stress factor in the exploitation of water resources. There is a wide recognition nowadays that there is a need for strategies for the sustainable use of water resources and water demand management. In the city of Volos, Greece, the number of water meters has been tripled from 1979 to 2006 while yearly water production has increased 2.62 times these 27 years. The fact that water sources have remained stable has created a disruption of water balance. In order to explore new approaches toward sustainable water management in the water supply sector, evaluate various aspects of current water policy, investigate the perspectives of water saving and evaluate water price elasticity in the city of Volos, Greece, a survey concerning the residential sector has been performed recently. All qualitative data were gathered through questionnaire with the method of personal interview. The questionnaire examines social features of consumers, water use patterns, water conservation methods, water pricing issues and the level of water services. Water quality, water demand and water availability issues, waterrelated problems, as well as public information concerning water and environmental issues, public reactions to price changes and public willingness to pay in the residential sector are the main aspects examined and analyzed. The influence of some selected variables in water conservation, such as the price of water, the size of the dwelling, the indoor and outdoor uses, the educational level, the income of consumers as well as rainfall and temperature levels, is examined, hierarchically set and residential water demand curve is calculated using the fixed effects and random effects model.

Estimating economic value of agricultural water under changing conditions and the effects of spatial aggregation

Given the high proportion of water used for agriculture in certain regions, the economic value of agricultural water can be an important tool for water management and policy development. This value is quantified using economic demand curves for irrigation water. Such demand functions show the incremental contribution of water to agricultural production. Water demand curves are estimated using econometric or optimisation techniques. Calibrated agricultural optimisation models allow the derivation of demand curves using smaller datasets than econometric models. This paper introduces these subject areas then explores the effect of spatial aggregation (upscaling) on the valuation of water for irrigated agriculture. A case study from the Rio Grande–Rio Bravo Basin in North Mexico investigates differences in valuation at farm and regional aggregated levels under four scenarios: technological change, warm-dry climate change, changes in agricultural commodity prices, and water costs for agriculture. The scenarios consider changes due to external shocks or new policies. Positive mathematical programming (PMP), a calibrated optimisation method, is the deductive valuation method used. An exponential cost function is compared to the quadratic cost functions typically used in PMP. Results indicate that the economic value of water at the farm level and the regionally aggregated level are similar, but that the variability and distributional effects of each scenario are affected by aggregation. Moderately aggregated agricultural production models are effective at capturing average-farm adaptation to policy changes and external shocks. Farm-level models best reveal the distribution of scenario impacts.

Estimating demand for irrigation water in European Mediterranean countries through MCDM models

This paper reports results from the European project WADI which evaluates the sustainability of the European irrigation sector under different policy scenarios. Results presented are based on the generation of farm level water demand curves through multicriteria mathematical programming models. The results are compared across regions and matched against a review of water pricing policies that were in place in various European Union member states and accession countries prior to the entering into force of the Water Framework Directive (WFD). The results emphasise the variability of behaviour of irrigated systems and the need for a more clear understanding of policy objectives before implementing any policy instrument. Once the objectives are clarified, economic models can contribute to understanding the appropriateness of different management strategies and to the effectiveness of different policy instruments.

Optimal design and operation of irrigation pumping stations using mathematical programming and Genetic Algorithm (GA)

For many water authorities worldwide, one of the greatest potential areas for energy savings is in pump selection and in the related effective scheduling of daily pump operations. The optimal control and operation of an irrigation pumping station is achieved here by first solving the nonlinear governing model using Lagrange Multipliers (LM) and then through Genetic Algorithm (GA) approach. Computation in both methods is driven by an objective function that includes operating and capital costs subject to various performance and hydraulic constraints. The LM approach first specifies the annual energy costs and minimizes the total cost for all sets of pumping stations; the method then selects the least-cost pumps from among the feasible sets. The GA model simultaneously determines the least total annual cost of the pump station and its operation. The solution includes the selection of pump type, capacity, and the number of units, as well as scheduling the operation of irrigation pumps that results in minimum design and operating cost for a set of water demand curves. Application of the two models to a real-world project shows not only considerable savings in cost and energy but also highlights the efficiency and ease of the GA approach for solving complex problems of this type.

TESTS OF BEHAVIORAL‐ECONOMIC ASSESSMENTS OF RELATIVE REINFORCER EFFICACY II: ECONOMIC COMPLEMENTS

This experiment was conducted to test the predictions of two behavioral-economic approaches to quantifying relative reinforcer efficacy. The normalized demand analysis suggests that characteristics of averaged normalized demand curves may be used to predict progressive-ratio breakpoints and peak responding. By contrast, the demand analysis holds that traditional measures of relative reinforcer efficacy (breakpoint, peak response rate, and choice) correspond to specific characteristics of non-normalized demand curves. The accuracy of these predictions was evaluated in rats' responding for food or water: two reinforcers known to function as complements. Consistent with the first approach, predicted peak normalized response output values obtained under single-schedule conditions ordinally predicted progressive-ratio breakpoints and peak response rates obtained in a separate condition. Combining the minimum-needs hypothesis with the normalized demand analysis helped to interpret prior findings, but was less useful in predicting choice between food and water--two strongly complementary reinforcers. Predictions of the demand analysis had mixed success. Peak response outputs predicted from the non-normalized water demand curves were significantly correlated with obtained peak responding for water in a separate condition, but none of the remaining three predicted correlations was statistically significant. The demand analysis fared better in predicting choice--relative consumption of food and water under single schedules of reinforcement predicted preference under concurrent schedules significantly better than chance.

Estimating a socially optimal water price for irrigation versus an environmentally optimal water price through the use of Geographical Information Systems and Social Accounting Matrices

This article develops a method for establishing water prices and their effects in order to provide policy makers an environmentally and socially optimal range of regional prices for irrigation water. Two prices are determined. The “environmentally optimal price” of water is defined as the one that internalizes the environmental costs generated by agricultural consumption. The “social optimally price” of water is defined as the one that maximizes levies on water for agriculture without affecting the regional economy. The environmentally optimal price is calculated with an economic model built over a Geographical Information System (GIS) that allows the economic quantification and valuation of the environmental cost of water in different basins. The optimal price is calculated with a demand curve for irrigation water introduced into a Social Accounting Matrix (SAM) to observe if the regional economy can accept higher prices without affecting the regional GDP. Potential water prices are established, ranging from prices that minimize the negative impact in the regional economy to those that totally internalize the environmental cost of water.

Dynamic penalty function as a strategy in solving water resources combinatorial optimization problems with honey-bee mating optimization (HBMO) algorithm

Because of the complexity of some optimization problems, evolutionary and meta-heuristic algorithms are sometimes more applicable than the traditional optimization methods. Some difficulties in solving design-operation problems in the field of engineering are due to the multi-modality of the solution region of these problems. Since the design variables usually are specified as discrete variables and other continuous decision variables have to be set according to the range of the discrete ones, the possibility of trapping the final solution into some local optimum increases. In such cases, the capability of both traditional and evolutionary algorithms decreases. Thus, the development of a strategy to overcome this problem is the subject of this paper. For water utilities, one of the greatest potential areas for energy cost-savings is the effective scheduling of daily pump operations. Optimum design operation of pumping stations is a potential problem in this area that performs a wide background of solutions to this problem with different methods. Computation in all methods is driven by an objective function that includes operating and capital costs subject to various performances and hydraulic constraints. This paper achieves the optimal control and operation of an irrigation pumping station system by one of the latest tools used in optimization problems, which is the honey-bees mating optimization (HBMO) algorithm and is tested with a practical design. The HBMO algorithm with dynamic penalty function is presented and compared with two other well-known optimization tools which are the Lagrange multipliers (LM) method and genetic algorithms (GA) as well as with the previous results of the HBMO algorithm with constant penalty function for the same problem. The LM, GA and HBMO approaches simultaneously determine the least total annual cost of the pumping station and its operation. The solution includes the selection of pump type, capacity and the number of units, as well as scheduling the operation of irrigation pumps that results in minimum design and operating cost for a set of water demand curves. In this paper, the HBMO algorithm is applied and the dynamic penalty function is tested to demonstrate the efficiency of this combination simultaneously. The results are very promising and prove the ability of combining the dynamic penalty function with the HBMO algorithm for solving combinatorial design–operation optimization problems. Application of all these models to a real-world project shows not only considerable savings in cost and energy but also highlights the efficiency and capability of the dynamic penalty function in the HBMO algorithm for solving complex problems of this type.

Derived Willingness-to-Pay for Household Water Use with Price and Probabilistic Supply

Stochastic optimization is used to estimate the willingness-to-pay (WTP) of individual households and groups of households for changes in a combination of probabilistic water supply reliability and retail price of water. By modeling the financial and “perceived” costs of implementing long- and short-term conservation options and assuming rational (expected value cost minimizing) behavior, economic demand curves for water and expected water use can be estimated for a household. Monte Carlo-simulation techniques are used to represent variability in the household model parameters and derive estimates of aggregate household WTP for water supply reliability, and demand curves for water and conservation measures. Examples are provided to illustrate the approach.

Optimal design of pumping stations of inland intensive fishfarms

An algorithm for selection of least cost or optimum pump combinations in water supply systems and to evaluate the system's energy cost of inland intensive fishfarms is presented. The model is based on solving a non-linear programming problem. Optimum design refers to the selection of pump type, capacity, and number of units that results in minimum design and operating costs for a given water demand curve. The optimization process consists of three main steps: (1) determination of fishfarm daily water requirements; (2) determination of all sets of pumping stations that satisfy the maximum requirements of flow and energy head of the fishfarm water distribution network; and (3) selection of the least-cost set among the feasible sets of pumping stations. The model was established based on data from an actual eel fishfarm in southern Spain. Application of the model shows that the optimal solution with the pump operation scheme at a constant rate (maximum requirements of flow) saved 70% of the actual total annual cost of the pumping station. The optimal solution with a variable pumping rate (pumped flow adjustment to match demand) saved 92% of the actual total annual cost with all fixed speed pump groups. Savings about 95% were obtained when one variable speed pump group was included in the optimal solution.

Water scarcity, pricing mechanism and institutional reform in northern China irrigated agriculture

With water scarcity becoming an increasing constraint to food production in northern China, pricing mechanism has been given a high priority in dealing with the problem. Using selected irrigation districts in northern China as a case study, this paper probes the effectiveness of pricing-based water policies in addressing challenges facing irrigated agriculture under China’s current water management institutions. The examination shows that the rapid increase in irrigation cost during the past decade has failed to generate a force for water conservation. Over-exploitation of groundwater resources has even intensified with the shift to higher value-added but often more water intensive crops. Based on a normative analysis of water demand curves, the logic behind the reluctance for water authorities and farmers to conserve water is elaborated. The result suggests that pricing irrigation alone is not a valid means of encouraging water conservation under the current irrigation management institutions. Clearly defined and legally enforceable water rights and responsibilities for water operators and users in the irrigation system are the foundation underlying the incentives for conserving water and improving the irrigation efficiency.

An inter-seasonal agricultural water allocation system (SAWAS)

This paper introduces a linear programming optimization model for analyzing inter-seasonal allocation of irrigation water in quantities and qualities and their impact on agricultural production and income. The SAWAS model is a developed version of the Agricultural Sub-Model (AGSM). In this research, we stress water scarcity as a problem that arises when water is not found in proper quantity and quality at the appropriate place and time. The model is designed to serve as a decision-making tool for planners of agricultural production on both the district and the regional level. It generates an optimal mix of water-demanding activities that maximizes the net agricultural income of the districts and gives the water demands under various prices. It also provides the planner with tools to carry out ‘what-if’ experiments and to generate optimal water demand curves. A principal feature of SAWAS is the use of demand and the benefits from water together with costs and optimization within the agricultural sector to specify the optimal usage of different water qualities. Hence the agricultural planner can use the outputs of SAWAS in order to bridge the gap between the limited water resources and the increased agricultural production in an area that suffers from severe water scarcity. The paper applies the SAWAS model to the Jordan Valley in Jordan.

Multicriteria analysis of derived water demand functions: a Spanish case study

Irrigated agriculture has been analysed in Spain in recent years because of its high water consumption and its apparent inefficiency. Several possibilities for water policy have been debated, in particular the pricing of irrigation water. This paper aims to contribute to this discussion by simulating the impact that a policy based upon the price of water could have on agricultural production, analysing the economic, social and environmental implications of such a water policy. This research introduces a methodology for deriving water-demand functions in contexts in which farmers' behaviour is not explained by the maximisation of gross margin but by a utility function with several conflicting criteria. This methodology utilises a weighted-goal programming approach to estimate a surrogate utility function for the farmer's decision process; this in turn is used to estimate the value of water demand in irrigated crop production using utility-derived demand functions. The empirical results of this study stress that water pricing as a single instrument for controlling water use is not a satisfactory tool for significantly reducing water consumption in agriculture. The reason for this is that consumption is not reduced significantly until prices reach such a level that farm income and agricultural employment are negatively affected. The results also show that the estimated water-demand curve is different when a multicriteria utility function rather than the classical profit maximisation hypothesis is employed.

Analyzing agricultural demand for water with an optimizing model

The paper introduces an optimizing linear model for analysing agricultural production under various water quantities, qualities, timing, prices and pricing policies. The model is designed to serve as a decision-making tool for planners of agricultural production on district and national levels. The output solutions provide the optimal mix of water-consuming activities to maximize the net income of the agricultural production of the districts and the water demands under various prices. It also provides the user with procedures to carry out ‘if–then’ sensitivity and scenario analyses and to generate optimal water demand curves. The paper presents the formulation of the model, indicating and analysing problems of linearity and scaling, the steps undertaken to examine and verify it, optimal water demand curves for eight districts in Israel (separately and as an integrated unit) and calculated estimates of water demand elasticity.

Command Area Water Demands. II: Water‐Demand Function

The cumulative water demand (CWD) curve was used for validating and calibrating the unit command area (UCA) model, which predicts the aggregate water demands of individual command areas for the entire crop season. During the model calibration process, as presented in the companion paper, three important variables in the operation stage on the prediction of demand were found to be dominant in determining the CWD curve profile. The logistic function with three parameters, which is a particular form of the exponential-type functions, was adopted for fitting the CWD curve. High correlations were observed between the individual curve parameters and the field variables. Three parameters are management-allowable depletion (MAD), irrigation application uniformity (IAU), and initial soil moisture (ISM). Effectiveness of the equation developed for a particular UCA using the regression analysis was successfully demonstrated, and applicability for some other UCAs in the same water system was also recognized.

The economics of water and salt balance

Two environmental features often associated are a shortage of water and an excess of electrolytes. We explored the economics of this situation by jointly manipulating the instrumental cost of consuming water and the amount of salt in the diet of rats. As the dietary salt increased, water intake increased; and as water cost increased, water intake fell. Food intake also declined as water cost increased, and the rats maintained a minimum ratio of water:salt consumed across all conditions. For all diets, as water intake fell, food intake and body weight also declined, perhaps defending the ratio of body water to lean body mass. There was no evidence that the slope of the demand curve for water changed as a function of dietary salt.

Water Supply for Power in Texas‐Gulf Region

Most water‐energy assessments have considered only a few water supply types and conservation technologies. Yet utilities are not only developing traditional surface sources, but are also using ground and waste water and buying water rights from irrigators. A linear program is developed that incorporates: (1) Supply curves for several water sources that reflect institutional constraints; and (2) water demand curves based on‐ the cost of alternative power plant cooling methods. The purpose of the model is to aid the Electric Power Research Institute in strategic planning on water availability issues. For the Texas‐Gulf region in the year 2000, it is found that the high cost of dry or mixed wet/dry cooling is unjustified unless: (1) New technologies lower the incremental cost of wet/dry cooling by more than 80%; or (2) unforeseen institutional restrictions prevent utilities from securing economic surface and ground water supplies. This conclusion contradicts previous studies which projected serious water‐energy conflicts for the region.

THE VALUE OF WATER IN THE GRAND RIVER BASIN: AN ESTIMATE OF THE DEMAND FOR WATER IN ONTARIO

An estimation of society’s response to change in the price of water is attempted using data from fifty-six Ontario municipalities. The price elasticity of demand for water, obtained through an estimation of the demand curve for water, is used to represent this response. The overall purpose of the study was to obtain some idea of the value of water to society, in such a way that it be incorporated into benefit-cost analyses of various water management options for the Grand River Basin in Ontario.

Reducing consumption in periods of acute scarcity: The case of water

This paper examines the impact of water conservation efforts in four California communities selected in part because of the range of conservation programs launched. The analysis will rest on 8 years of monthly data aggregated to the community level and will employ both Box-Jenkins (1976) procedures and techniques for pooled cross-sectional and time-series data (Kmenta, 1971, pp. 508 to 517). Theory will be drawn from social psychology and microeconomics; the former used to characterize certain shifts in the demand curve for water, the latter used to explain changes in consumption as a function of exogenous changes in price.

A REGIONAL APPROACH TO PROJECT EVALUATION1

ABSTRACT. Water and related land resource planning has generally been characterized by project evaluation in isolation. Feasible alternatives have been ignored because the economic analysis did not include the interdependence of such subregional and regional variables as factor and product prices and production possibilities. This paper presents an economic framework, consistent with a regional development objective and an efficiency criterion, for proposing and evaluating resource projects. Subregional and regional derived demand curves for water are developed under alternative assumptions of subregional competition, regional market restraints, and yield and price uncertainty. The derivation of water demand curves using the proposed regional framework as compared to sub regional isolation has the desirable properties of (1) a marginal analysis that is more flexible over time is substituted for a static average analysis; (2) range estimates incorporating probabilities are substituted for point estimates; (3) approximations to functional demand curves are substituted for “needs”; and (4) fewer resources are required to meet a regional market restraint.