The impact of the territorial gradient and the irrigation water price on agricultural production along the first phase of the Navarra Canal in Spain

Water is an issue in Spain, where it is generally scarce, and its availability is highly variable in different areas and times, particularly in agriculture, the main water consumer. Water pricing is one of the policy instruments used to control irrigation water use. However, specific contextual studies to provide greater details, understand farmers’ behaviour, and clarify the consequences and effectiveness of water pricing are generally unavailable. Here, we developed and applied a simulation model based on two Positive Mathematical Programming (PMP) methods, which makes the model more robust, to better understand and quantify the impact of the north–south territorial gradient on farmers’ decisions concerning agricultural water pricing in the first phase of the Navarra Canal irrigation area in northern Spain. This model couples water use with rainfed and irrigated areas, farmer revenue, and labour. The results show spatial north–south variability in the 50 km of the first phase of the Navarra Canal. In northern and middle regions, when water prices are increased, rainfed crops are chosen to substitute irrigated crops due to abundant rainfall and a lack of the appropriate climate and soil to grow other crops. Meanwhile, southern regions depend mainly on irrigation and are more sensitive to water price increases. These very productive southern regions also show larger gross margins and paid labour values. In every canal region, with an increase of 0.1 EUR/m3 in the water price, economic losses can reach up to 400 EUR/ha. Meanwhile, an increase in water prices over 0 EUR/m3 leads to decreased water use per hectare.