The economy of water

In our country water is a scarce resource. Thus it is very important to propose new ways for saving it, particularly in agriculture, as this sector uses 70 percent of the water available for human consumption

When a business goes bankrupt, its assets must be divided among creditors. The fact that some of them have more rights than others seems indisputable and determines the distribution. Economists observe this rule and want to apply it to the irrigation water management.

Renan Goetz and Àngels Xabadia, from the Economy Department, and Joan Pujol, from the Department of Chemical and Agricultural Engineering and Agrifood Technology, all of them from the UdG, participate in this new research line. Goetz explains that regarding the distribution of irrigation water, the situation is similar to that of bankruptcies, that is, some users have more rights than others. These rights are related to the area they need to irrigate or the sort of crops they grow. In a country like ours, where water demand causes a great pressure on water resources, it is very important to propose new ways to save water, particularly in agriculture, since this activity consumes 70 percent of the water available for human consumption.


The water allocation

These three UdG lecturers work with real data which they turn into econometric and biophysical models thanks to mathematics. This study takes place within the framework of the ECORIEGO inter-university project, devoted to the economy of irrigation water. The speciality they work in was born in the nineties and, among other things, it aims at teaching how to allocate reasonably scarce resources like water, whose price has nothing to do with offer and demand. Experts think that it is possible to improve the water yield by thirty or forty percent when it is scarce, that is, during drought periods, since “economization is achieved when the good itself is most scarce”. In the usual allocation model, water is provided by the hectare, regardless of the good or bad use of it. The sampling used in the study seems to show that current irrigation techniques are heterogeneous, and very often inefficient, especially with surface irrigation, which demands great amounts of water. Researchers suggest that farmers should say how much water they actually need and, at the same time, they establish an incentive program for farmers to tell the truth. However water management of crops is very complex and it is not always easy to know the real needs. The model proposes that, the bigger the excess of water resulting from the subtraction between the farmer’s demand and the real needs of their crops, the more behind they will be moved on the queue of water allocation. On the other hand, those who are more careful with the difference between their demand and their real needs will be moved forward. Of course, the pressure to tell the truth is introduced by the evidence that there will not be enough water to cover all the demand. Xabadia, Goetz and Pujol admit that their proposal may cause tensions, but if the scene is one of scarcity, users will have to adjust to it. In fact, regarding the farmers’ response, the researchers are basically speculating, since their calculations have not yet been presented to irrigator communities, the ones who would have to approve them before their application.


A country with water shortage

The general impression of experts is that the Iberian Peninsula is a place with a great imbalance between water demand and offer, which can only be sorted out with an efficient management. A part from the balance between offer and demand, some studies also include the amount of water used by exported and imported farming products, an amount that has been called the water footprint. If the water footprint is taken into account it is possible to assess whether the farming production is sustainable in the long term, both for a region or a country and at a global scale. As for the efficient management issue, economists warn that when the water consumed comes from the natural cycle, the cost calculation is easy. However, when it has been necessary to build reservoirs to store it and canals to redistribute it, calculations become much more complex. Moreover, they indicate that the money invested to store and distribute water is not available any more for other uses that may also be necessary. They take the production of milk in the Cantabrian mountains (North of Spain) as an example of a more natural production cycle, whereas mediterranean fruit and vegetables are completely the opposite, because in order to produce them an additional investment to the water cycle is required. These researchers warn that, in the current situation, some of the water costs are not taken into account, and that makes it difficult to find a balance between demand and offer. Considering all the costs “would help find the real balance and, therefore, reduce the water footprint and open a new, more sustainable path for water management”, they assure.

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