IDEAS home Printed from https://ideas.repec.org/p/hal/journl/cirad-04059062.html
   My bibliography  Save this paper

Water value, resource rent recovery and economic welfare cost of environmental protection: A water-sector model for the Steelpoort sub-basin in South Africa

Author

Listed:
  • Rashid Hassan
  • Stefano Farolfi

    (Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement, UMR G-EAU - Gestion de l'Eau, Acteurs, Usages - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - BRGM - Bureau de Recherches Géologiques et Minières - IRD - Institut de Recherche pour le Développement - AgroParisTech - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement)

Abstract

This study developed an analytical framework and an empirical water sector model to evaluate current and alternative water allocation regimes in the Steelpoort sub-basin (SPSB) in terms of the key objectives of the national water act of South Africa. The analyses showed that bulk water is currently not only oversupplied to offstream uses in the SPSB at the expense of the ecological Reserve (instream benefits) but also underpriced. The water research levy, the only mechanism used for rent capture, recovers a negligible proportion of the water resource rent (RR) (less than 2% at best) implying that almost all RR dissipates to various offstream users in the form of indirect subsidies of about R0.42/m 3 with the more realistic lowprice elasticity assumption. Commercial irrigation enjoys the highest subsidy being the major consumer followed by mining and hence the most to be affected by policy change in this regard. Results also indicate that the total maximum economic value offstream users are willing to pay for increasing water yields to supply the full requirement levels currently enjoyed at the SPSB is estimated at about R2.8/ m 3. Although this value does not properly measure the net social gain or loss of environmental protection, it serves as a benchmark value against which per unit costs of potential alternative water supply options can be compared. A few caveats remain as key limitations of the study call for further research work. First, this study did not generate information on instream benefits to compare with offstream values lost as a result of protecting the ecological Reserve. Second, the study can benefit from improved specification of the water sector model parameters, particularly the supply side as better information will allow estimation of an upward sloping supply (marginal cost) curve.

Suggested Citation

  • Rashid Hassan & Stefano Farolfi, 2005. "Water value, resource rent recovery and economic welfare cost of environmental protection: A water-sector model for the Steelpoort sub-basin in South Africa," Post-Print cirad-04059062, HAL.
    • Handle: RePEc:hal:journl:cirad-04059062
    DOI: 10.4314/wsa.v31i1.5115
    Note: View the original document on HAL open archive server: https://hal.science/cirad-04059062
    as

    Download full text from publisher

    File URL: https://hal.science/cirad-04059062/document
    Download Restriction: no
    File URL: https://libkey.io/10.4314/wsa.v31i1.5115?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Rashid Hassan, 2003. "Economy-wide benefits from water-intensive industries in South Africa: Quasi-input-output analysis of the contribution of irrigation agriculture and cultivated plantations in the Crocodile River catch," Development Southern Africa, Taylor & Francis Journals, vol. 20(2), pages 171-195.
    2. Amir, I. & Fisher, F. M., 1999. "Analyzing agricultural demand for water with an optimizing model," Agricultural Systems, Elsevier, vol. 61(1), pages 45-56, July.
    3. Dockel, J. A., 1973. "The Influence of the Price of water on certain water demand categories," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 12(3), July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Doppler, Werner & Salman, Amer Z. & Al-Karablieh, Emad K. & Wolff, Heinz-Peter, 2002. "The impact of water price strategies on the allocation of irrigation water: the case of the Jordan Valley," Agricultural Water Management, Elsevier, vol. 55(3), pages 171-182, June.
    2. Kampas, Athanasios & Petsakos, Athanasios & Rozakis, Stelios, 2012. "Price induced irrigation water saving: Unraveling conflicts and synergies between European agricultural and water policies for a Greek Water District," Agricultural Systems, Elsevier, vol. 113(C), pages 28-38.
    3. Krishna C. Prasad & Barbara Van Koppen & Kenneth Strzepek, 2006. "Equity and productivity assessments in the Olifants River basin, South Africa," Natural Resources Forum, Blackwell Publishing, vol. 30(1), pages 63-75, February.
    4. Athanasios Tsiarapas & Zisis Mallios, 2023. "Estimating the long-term impact of market power on the welfare gains from groundwater markets," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(3), pages 377-406, July.
    5. Backeberg, G.R., 2004. "Research management of water economics in agriculture - an open agenda," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 43(3), pages 1-18, September.
    6. Li, W. & Li, Y.P. & Li, C.H. & Huang, G.H., 2010. "An inexact two-stage water management model for planning agricultural irrigation under uncertainty," Agricultural Water Management, Elsevier, vol. 97(11), pages 1905-1914, November.
    7. Sun, J.X. & Yin, Y.L. & Sun, S.K. & Wang, Y.B. & Yu, X. & Yan, K., 2021. "Review on research status of virtual water: The perspective of accounting methods, impact assessment and limitations," Agricultural Water Management, Elsevier, vol. 243(C).
    8. G. R. Soltani & M. Bakhshoodeh & M. Zibaei, 2009. "Optimization of Agricultural Water Use and Trade Patterns: The Case of Iran," Working Papers 508, Economic Research Forum, revised Dec 2009.
    9. Bartolini, F. & Bazzani, G.M. & Gallerani, V. & Raggi, M. & Viaggi, D., 2007. "The impact of water and agriculture policy scenarios on irrigated farming systems in Italy: An analysis based on farm level multi-attribute linear programming models," Agricultural Systems, Elsevier, vol. 93(1-3), pages 90-114, March.
    10. Salman, Amer Zahi & Al-Karablieh, Emad, 2004. "Measuring the willingness of farmers to pay for groundwater in the highland areas of Jordan," Agricultural Water Management, Elsevier, vol. 68(1), pages 61-76, July.
    11. Chuan-Zhong Li & Ranjula Bali Swain, 2016. "Growth, Water Resilience, and Sustainability: A DSGE Model Applied to South Africa," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(04), pages 1-23, December.
    12. Xu, Qin & Fox, Glenn & McKenney, Dan & Parkin, Gary, 2019. "A theoretical economic model of the demand for irrigation water," Agricultural Water Management, Elsevier, vol. 225(C).
    13. Christian Franco-Crespo & Jose Maria Sumpsi Viñas, 2017. "The Impact of Pricing Policies on Irrigation Water for Agro-Food Farms in Ecuador," Sustainability, MDPI, vol. 9(9), pages 1-18, August.
    14. Bazzani, Guido Maria & di Pasquale, S. & Gallerani, Vittorio & Morganti, S. & Raggi, Meri & Viaggi, Davide, 2004. "The impact of the EU Water Framework Directive on irrigated agriculture in Italy: the case of the North-East fruit district," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 5(1), pages 1-9, January.
    15. Namara, Regassa E. & Hanjra, Munir A. & Castillo, Gina E. & Ravnborg, Helle Munk & Smith, Lawrence & Van Koppen, Barbara, 2010. "Agricultural water management and poverty linkages," Agricultural Water Management, Elsevier, vol. 97(4), pages 520-527, April.
    16. Salman, A. Z. & Al-Karablieh, E. K. & Fisher, F. M., 2001. "An inter-seasonal agricultural water allocation system (SAWAS)," Agricultural Systems, Elsevier, vol. 68(3), pages 233-252, June.
    17. Lorite, I.J. & Mateos, L. & Orgaz, F. & Fereres, E., 2007. "Assessing deficit irrigation strategies at the level of an irrigation district," Agricultural Water Management, Elsevier, vol. 91(1-3), pages 51-60, July.
    18. Adeyemo, Josiah & Otieno, Fred, 2010. "Differential evolution algorithm for solving multi-objective crop planning model," Agricultural Water Management, Elsevier, vol. 97(6), pages 848-856, June.
    19. Amir, I. & Fisher, F. M., 2000. "Response of near-optimal agricultural production to water policies," Agricultural Systems, Elsevier, vol. 64(2), pages 115-130, May.
    20. Musango, J.K. & Peter, C., 2007. "A Bayesian approach towards facilitating climate change adaptation research on the South African agricultural sector," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 46(2), pages 1-15, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:cirad-04059062. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.