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Farm-level Hydroeconomic Analysis of Alternative Water Tariff Charges Using a Hybrid Solution Method

Author

Listed:
  • Bennie Grové

    (University of the Free State)

  • Johannes Jacobus Bezuidenhout

    (University of the Free State)

  • Nicolette Matthews

    (University of the Free State)

Abstract

This paper's main objective is to develop a farm-level water programming model to realistically model extensive margin and intensive margin responses resulting from deficit irrigation to the implementation of volumetric water charges. The highly complex programming model that uses the FAO56 water budget calculations to simulate crop water use while using relative evapotranspiration to estimate crop yield is solved using a hybrid procedure. The hybrid solution procedure uses a genetic algorithm to simplify the optimization model by fixing the irrigation schedule of each crop and then solving for the optimal water allocation amongst crops subject to water constraints. The area-based charges results showed that when irrigation application efficiency is low, irrigators could apply more water per hectare to sustain high crop yields without being held accountable if water quotas are exceeded. In contrast, irrigators with higher application efficiency could use less water than the area-based estimated water use. The results also showed that volumetric water charges cause both intensive margin and extensive margin responses. The conclusion of whether a volumetric-based water charging system will be better than area-based water charges is not straightforward because of differentiated impacts on profitability and hydrology. While irrigators will use irrigation water more efficiently and adopt more efficient irrigation technologies, their changed behavior could impact the hydrology of the water system through reduced return flows.

Suggested Citation

  • Bennie Grové & Johannes Jacobus Bezuidenhout & Nicolette Matthews, 2023. "Farm-level Hydroeconomic Analysis of Alternative Water Tariff Charges Using a Hybrid Solution Method," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 37(12), pages 4679-4692, September.
    • Handle: RePEc:spr:waterr:v:37:y:2023:i:12:d:10.1007_s11269-023-03569-y
    DOI: 10.1007/s11269-023-03569-y
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    References listed on IDEAS

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    1. Mohammad Ismaeil Kamali & Hossein Ansari & Rouzbeh Nazari, 2022. "Optimization of Applied Water Depth Under Water Limiting Conditions," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 36(11), pages 4081-4098, September.
    2. Dono, Gabriele & Giraldo, Luca & Severini, Simone, 2010. "Pricing of irrigation water under alternative charging methods: Possible shortcomings of a volumetric approach," Agricultural Water Management, Elsevier, vol. 97(11), pages 1795-1805, November.
    3. Foster, T. & Brozović, N., 2018. "Simulating Crop-Water Production Functions Using Crop Growth Models to Support Water Policy Assessments," Ecological Economics, Elsevier, vol. 152(C), pages 9-21.
    4. Sapino, Francesco & Pérez-Blanco, C. Dionisio & Gutiérrez-Martín, Carlos & García-Prats, Alberto & Pulido-Velazquez, Manuel, 2022. "Influence of crop-water production functions on the expected performance of water pricing policies in irrigated agriculture," Agricultural Water Management, Elsevier, vol. 259(C).
    5. Javier Martínez-Dalmau & Carlos Gutiérrez-Martín & Alfonso Expósito & Julio Berbel, 2023. "Analysis of Water Pricing Policy Effects in a Mediterranean Basin Through a Hydroeconomic Model," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 37(4), pages 1599-1618, March.
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