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Irrigation subsidies and their externalities

Author

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  • Hellegers, Petra
  • Davidson, Brian
  • Russ, Jason
  • Waalewijn, Pieter

Abstract

Subsidising irrigation is a legitimate approach that governments have used to achieve a set of social objectives. Yet it may simultaneously impose negative externalities, especially in the form of environment degradation. Could subsidies be reformed to be less harmful? To answer this question requires an insight into how various kinds of subsidies work, the interplay between subsidies and externalities, and the political complexity of subsidy reform. In this paper these insights are investigated using supply-demand graphs. It is argued in this paper that a broad definition of subsidies should be used, one that includes the implicit subsidies that result from partial cost recovery. It is also shown that even without subsidies, externalities due to irrigation would still exist and that any reform of existing subsidies will counter the positive impact irrigation may have, which may not be a desirable outcome.

Suggested Citation

  • Hellegers, Petra & Davidson, Brian & Russ, Jason & Waalewijn, Pieter, 2022. "Irrigation subsidies and their externalities," Agricultural Water Management, Elsevier, vol. 260(C).
    • Handle: RePEc:eee:agiwat:v:260:y:2022:i:c:s0378377421005618
    DOI: 10.1016/j.agwat.2021.107284
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    References listed on IDEAS

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    1. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    2. Edgar Tellez Foster & Amnon Rapoport & Ariel Dinar, 2018. "Alternative policies for subsidizing groundwater extraction: A field study in México," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 2(2), pages 55-69, September.
    3. R. Quentin Grafton & Sarah Ann Wheeler, 2018. "Economics of Water Recovery in the Murray-Darling Basin, Australia," Annual Review of Resource Economics, Annual Reviews, vol. 10(1), pages 487-510, October.
    4. Mr. David Coady & Ian W.H. Parry & Nghia-Piotr Le & Baoping Shang, 2019. "Global Fossil Fuel Subsidies Remain Large: An Update Based on Country-Level Estimates," IMF Working Papers 2019/089, International Monetary Fund.
    5. repec:reg:rpubli:46 is not listed on IDEAS
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