Evaluation of the water cost effect on water resource management:

Abstract

The greatest water consumption takes place during irrigation of arid and semiarid areas, therefore, water resource management is fundamental for sustainability. For correct management, several tools and decision-making systems are necessary while paying close attention to aspects such as profitability, water cost, etc. Water resources are scarce and some of them are of low quality. This extremely delicate situation occurs in some regions of the world and it explains increasing water cost. In Europe, the policies relating to water use (2000/60/EC) pay particular attention to the need of its protection and conservation. To ensure this, a large number of measures, including the establishment of prices which really correspond to their usage costs, have been set forth. Water subsidies are relatively important in all European countries. In this study, a specific methodology is applied to a Spanish semi-arid region. It is useful and easy to apply, not only by farmers, but also by water managers and politicians in charge of policy. The methodology also helps in the decision-making process about water cost in agriculture. In this area (Hydrogeological System 08.29, Spain), the resources are mainly underground water with a high variable cost and without any direct subsidies. This model allows us to analyse the effect of different water costs and to find the optimum strategy giving the maximum gross margin in line with water cost and its main determining factors (irrigation system, climatic variability, etc.).

The methodology is based on the effect of irrigation on crop yield with its production function, integrating the effect of application efficiency. In this way, a relationship between gross margin and gross irrigation depth is obtained. Working with permanent irrigation systems and four crops (barley, garlic, maize and onion), the main conclusion is that the optimum gross irrigation depths are always fewer than those necessary for maximum crop yield and when irrigation depths are fewer water cost increases. Irrigation depths, which maximise the economic efficiency in the use of water (€ m⁻³), are fewer than those which maximise the gross margin; therefore, this aspect must be considered in irrigation scheduling. The results also show important differences among crops, depending on their water requirements and their economic profitability.

Introduction

The area under irrigation in the world is very large and is continuously growing. From 1975 to 1995, it has increased 72%. In Europe, irrigated land has doubled in this period and in Spain, the European country with the largest irrigated area, irrigation already exceeds 3,500,000 ha (FAO, 2002). Irrigation is a decisive factor in vast areas of our planet, among which, a large part of the European Mediterranean basin is included.

As Framework Directive 2000/60/EC states, water is not a product, property, or goods of any kind, it is a heritage that must be protected and defended. The use of this scarce and essential resource is of great importance from many points of view: environmental, social, economic and political.

The debate over the price of water is complex, considering that it is a natural environmental resource. It is generally accepted that a great many factors (environmental, landscape, social, cultural, etc.) influence the economic valuation of water so the concept of application cost emerges in the case of irrigation water use (Haruvy and Sadan, 1994, Ortega, 2000, Garrido, 2001, Barraquee, 2001).

Charging a rate has become one form of action due to the agricultural demand of water (Directive 2000/60/EC). It is getting more usual to use progressive tariffs, in which the pricing is based on several prices (COM, 2000). There is an initial price, relatively low, which corresponds to a consumption considered rational; other prices, much higher, correspond to consumptions over and above the limits, which represent an unsuitable use of water.

Corominas (1996) points out that the current cost of water in irrigated public Spanish lands is about 0.12 € m⁻³, including regulation, transport and distribution to the farmer’s plot, with public subsidies of approximately 90%. The cost of water for city use is more than twice the former, with a 25% subsidy. This situation is representative of most irrigated European farms. This concept must take into account the idea of balancing the cost of water to the price of water, which should be analysed with special attention when using water for irrigation (Garrido, 1998). We must not forget either, that currently, in most cases, government subsidies for irrigation water are not related to crop productivity, employment created, farm size, farmer’s income and water management (Varela et al., 1998, Calatrava and Garrido, 2001).

In general, the actual costs of water available for use varies within the following ranges (Castillo, 1997):

• ground water: 0.12–0.18 € m⁻³,

• diverted water: 0.15–0.24 € m⁻³,

• desalted water: sea 0.84–1.14 € m⁻³; brackish water 0.09–0.18 € m⁻³,

• reused water: 0.15–0.18 € m⁻³.

The efficient use of water resources will be a fundamental target for farmers and water management. There is an urgent need of methodologies that allow us to analyse, as precisely as possible, the effect of the price of water on the agricultural production process. The analysis must focus, mainly, on irrigation strategies to maximise gross margins and profits, taking into account the limits and restrictions imposed by the sustainability of the production system. The price of water is obviously not the only factor taken into account in this process. There are other factors to be considered, e.g. distribution uniformity, application efficiency, and irrigation scheduling.

The aim of the study is to provide simple methodology for analysing the effect of the cost of water on the crops in semiarid regions. This is done by economically evaluating the best strategies and their implications. Moreover, the results of their application to a specific territory in a semiarid region with scarce water resources (Castilla-La Mancha) are examined and discussed for four important crops, as well as the implications for Europe in general. These crops are: barley (Hordeum vulgare L.), garlic (Allium sativum L.), maize (Zea mays L.) and onion (Allium cepa L.).