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Estimation of farmers’ willingness to pay for water in the agricultural sector

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  • Bozorg-Haddad, Omid
  • Malmir, Marzieh
  • Mohammad-Azari, Sahar
  • Loáiciga, Hugo A.

Abstract

Increasing the reliability of irrigation water raises the cost of water storage and the price that farmers must pay for water. Evaluating farmers’ willingness to pay (WTP) for water is key to determining the reliability of irrigation water achievable. This paper presents a probabilistic optimization method for estimating the WTP to avoid water shortage. A nonlinear programming model was formulated to model water use and estimate a single farmer’s WTP when water shortage occurs. The model was subsequently expanded to include the WTP of a group of farmers relying on Monte Carlo simulation. Results show that low water prices do not have any effect on water use when there is no shortage of water. Facing water shortage, farmers employ irrigation systems with high efficiency to reduce the use and cost of irrigation water. They also change the cropping pattern to cultivate crops with low water requirements. The farmers’ WTP for irrigation water during shortage is assessed probabilistically and is found to be highly variable.

Suggested Citation

  • Bozorg-Haddad, Omid & Malmir, Marzieh & Mohammad-Azari, Sahar & Loáiciga, Hugo A., 2016. "Estimation of farmers’ willingness to pay for water in the agricultural sector," Agricultural Water Management, Elsevier, vol. 177(C), pages 284-290.
    • Handle: RePEc:eee:agiwat:v:177:y:2016:i:c:p:284-290
    DOI: 10.1016/j.agwat.2016.08.011
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    References listed on IDEAS

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    1. Parisa Ashofteh & Omid Bozorg Haddad & Miguel Mariño, 2013. "Scenario Assessment of Streamflow Simulation and its Transition Probability in Future Periods Under Climate Change," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(1), pages 255-274, January.
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    5. Ronald C. Griffin & James W. Mjelde, 2000. "Valuing Water Supply Reliability," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 414-426.
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    8. Medellín-Azuara, J. & Howitt, R.E. & Harou, J.J., 2012. "Predicting farmer responses to water pricing, rationing and subsidies assuming profit maximizing investment in irrigation technology," Agricultural Water Management, Elsevier, vol. 108(C), pages 73-82.
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    1. Tsigkou, Stavroula & Klonaris, Stathis, 2020. "Eliciting Farmers' Willingness to Pay for Innovative Fertilizer Against Soil Salinity: Comparison of Two Methods in a Field Survey," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 9, December.
    2. Francis Oremo & Richard Mulwa & Nicholas Oguge, 2021. "Sustainable water access and willingness of smallholder irrigators to pay for on-farm water storage systems in Tsavo sub-catchment, Kenya," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(2), pages 1371-1391, February.

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