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Discriminant Analysis Of Water Trade Among Irrigation Farmers In The Lower Orange River Of South Africa

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  • Armitage, R.M
  • Nieuwoudt, W.L.

Abstract

This study found that a water market emerged within the Lower Orange River for river water rights. The market emergence is attributed to the scarcity of water in this region and the demonstrated demand by farmers for a change in the allocation of these rights. Transfers were facilitated by authorisation of the Department of Water Affairs and Forestry permitting transfers of water rights, and the enabling environment defined by the regional Water Affairs office. Improving water trade could be achieved by the delegation of authority to the regional Department of Water Affairs to approve transfers, extending support to market transfers of canal water, and ensuring that water extraction is closely monitored as river water use increases in future. A discriminant analysis indicated that water rights transferred from farmers with potential to irrigate wine grapes, raisin grapes, and field crops to farmers with potential to irrigate table grapes, representing the highest valued use of the water. Farmers stated that the proposed new Water Law created much uncertainty about their water rights, stifling water market activity, and that it will lead to underinvestment in irrigated agriculture. Overcoming such institutional and legal barriers for market performance will require that water use allocations be specified for reasonable periods, be inherently secure, and water trading be permitted through the relevant legislatures.

Suggested Citation

  • Armitage, R.M & Nieuwoudt, W.L., 1999. "Discriminant Analysis Of Water Trade Among Irrigation Farmers In The Lower Orange River Of South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 38(01).
    • Handle: RePEc:ags:agreko:245957
    DOI: 10.22004/ag.econ.245957
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    References listed on IDEAS

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    1. G. F. Ortmann, 1987. "Land Rents and Production Costs in the South African Sugar Industry," South African Journal of Economics, Economic Society of South Africa, vol. 55(3), pages 163-169, September.
    2. Rosegrant, Mark W. & Binswanger, Hans P., 1994. "Markets in tradable water rights: Potential for efficiency gains in developing country water resource allocation," World Development, Elsevier, vol. 22(11), pages 1613-1625, November.
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    5. Easter, K. William, 1996. "MARKET APPROACHES TO WATER ALLOCATION: WHAT HAVE WE LEARNED?; Proceedings of the Fifth Joint Conference on Agriculture, Food, and the Environment, June 17-18, 1996, Padova, Italy," Working Papers 14428, University of Minnesota, Center for International Food and Agricultural Policy.
    6. Thobani, Mateen, 1997. "Formal Water Markets: Why, When, and How to Introduce Tradable Water Rights," The World Bank Research Observer, World Bank, vol. 12(2), pages 161-179, August.
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    Cited by:

    1. de Lange, W J. & Mahumani, B.K., 2013. "The marginal product value of irrigation water for potato and vine cultivation in the Sandveld region, South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 51(4), February.
    2. Nieuwoudt, W. Lieb, 2000. "Water market institutions: lessons from Colorado," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 39(01), pages 1-10, March.

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