ECONOMIC POLICIES FOR REGULATING AGRICULTURAL DRAINAGE WATER1

ABSTRACT: Agricultural drainage water is a major source of environmental pollution in many areas. This paper reviews the literature on the economics of nonpoint-source pollution and applies it to the regulation of agricultural drainage water. Four types of regulatory policies are considered. The empirical analysis is carried out for cotton production in the San Joaquin Valley of California. Variable inputs are the quantity of water applied and the type of irrigation system. All four policies can achieve economic efficiency under the conditions assumed here, but the policies differ in terms of the distributional impacts and administrative requirements.     

Promotion of residential water conservation measures in South Africa: the role of water-saving equipment

Environmental Economics and Policy Studies - In many urban settings around the world the severity of water scarcity has induced changes in household behavior, leading to reduction in the volume of...     

Regulating Water Quantity and Quality in Irrigated Agriculture: Learning by Investing under Asymmetric Information

An input-based incentive approach for controlling an agricultural non-point source pollution problem is developed. A regulatory agency designs a tax scheme and an investment policy to increase its informational base, in order to obtain the desirable water use and emissions for a set of agricultural producers whose individual water use and emissions cannot be observed without costly monitoring. The agency invests in order to increase observability of water use and emissions, and taxes the observed variables. Learning effects enhance the process of acquiring information about the individual producers' behavior. The optimal tax scheme and the cost minimizing monitoring program are determined. This revised version was published online in July 2006 with corrections to the Cover Date.     

Economics of reservoir sedimentation and sustainable management of dams

Accepted practice has been to design and operate reservoirs to fill with sediment, generating benefits from remaining storage over a finite period of time. The consequences of sedimentation and project abandonment are left to the future. This 'future' has already arrived for many existing reservoirs and most others will eventually experience a similar fate, thereby imposing substantial costs on society. Such costs could be avoided if sedimentation was minimized and dams were allowed to live forever. The fact that the world's inventory of suitable reservoir sites is limited provides an additional reason for encouraging the sustainable management of dams. This paper provides a framework for assessing the economic feasibility of sediment management strategies that would allow the life of dams to be prolonged indefinitely. Even if reduced accumulation or removal of sediment is technically possible, its economic viability is likely to depend on physical, hydrological and financial parameters. The model presented incorporates such factors and allows a characterization of conditions under which sustainable management would be desirable. The empirical implementation of the model draws upon the substantial amount of technical information available. We analyze the sustainability of reservoirs, with a focus on the trade-off between such sustainability and the short to medium term benefits which a reservoir is expected to produce. The results show that, for a very wide range of realistic parameter values, sustainable management of reservoirs is economically more desirable than the prevailing practice of forcing a finite reservoir life through excessive sediment accumulation.     

The design of water markets when instream flows have value

The main objective of this paper is to design and test a decentralized exchange mechanism that generates the location-specific pricing necessary to achieve efficient allocations in the presence of instream flow values. Although a market-oriented approach has the potential to improve upon traditional command and control regulations, questions remain about how these rights-based institutions can be implemented such that the potential gains from liberalized trade can be realized. This article uses laboratory experiments to test three different water market institutions designed to incorporate instream flow values into the allocation mechanism through active participation of an environmental trader. The smart, computer-coordinated market described herein offers the potential to significantly reduce coordination problems and transaction costs associated with finding mutually beneficial trades that satisfy environmental constraints. We find that direct environmental participation in the market can achieve highly efficient and stable outcomes, although the potential does exist for the environmental agent to influence outcomes.     

Regulating water quantity and quality in irrigated agriculture

This paper largely applies the theoretical model formulated in an earlier paper by the authors, of an input based approach to control an agricultural non-point-source pollution. The empirical problem includes a groundwater aquifer being polluted by several agricultural producers. In order to prevent degradation of the quality and depletion of the quantity of the water in the aquifer, a regulatory agency must intervene. The regulatory agency does not have all the information needed for decision making. The producers» use of water from a surface supply is recorded and additional water is pumped from the ground aquifer, the amount of which is unknown to the agency. The agency also does not know the physical characteristics of the production process that is factored into the pollution process. The model evaluates two monitoring regimes (central and individual) and two regulatory tools (taxes and quotas) associated with each regime. Individual monitoring was found to be superior to central monitoring, both in terms of the physical characteristics of the problem (water quality and quantity) and in terms of regional income. For both the central and the individual monitoring regimes, the optimal paths of the state variables reach steady-state values relatively early, with values in the individual monitoring reaching the steady-state earlier than in the case of central monitoring. The optimal path of investment in monitoring equipment suggested investment in monitoring equipment as early as possible.1998 Academic Press     

Irrigation water management policies: Allocation and pricing principles and implementation experience

Food security and sustainable development require efficient use of water resources, especially in irrigation. Economic pricing can be an effective tool to achieve more efficient water use, provided it is supported by other policies in implementation. Applying various water pricing and cost recovery arrangements is suggested for efficient allocation. Any adverse impact on farmers’ incomes must be addressed and more reliable service must accompany higher prices. Experience from several countries suggests a variety of implementation issues. Essential complements to water pricing are water distribution rules and technological choices at critical nodes in the delivery system that allow farmers flexibility in conserving water in response to higher prices. Among supporting institutions, water users associations seem a higher priority than water markets.     

A lagrangian dispersion model for calculating concentration distribution within a built-up domain

A Lagrangian model to study the dispersion of pollutants between urban buildings is described. The flow field is supplied by an objective analysis (Rockle (1990) Ph.D. thesis, Vom Fachbereich Mechanik, der Technischen Hochschule Darmstadt, Germany) and is adjusted to satisfy the continuity equation. From the resulting; mass consistent field the Lagrangian diffusion parameters are eliminated. A 3-D Lagrangian diffusion model in a nonhomogeneous field is applied to calculate the pollutant distribution between the buildings. Several examples are studied and compared to wind tunnel measurements.     

Whither La Plata? Assessing the state of transboundary water resource cooperation in the basin

In many ways, current treaty arrangements for cooperation over shared water resources among Argentina, Bolivia, Brazil, Paraguay and Uruguay — the five riparian states in South America's La Plata basin — have been relatively successful. These arrangements, mostly bilateral and trilateral partial coalition agreements and institutions that operate under the aegis of the 1969 La Plata River Treaty, have led to significant economic gains from the treaty arrangements for all five riparian states. But these economic gains have also generated significant externalities — particularly, severe environmental degradation — suggesting that alternate cooperative arrangements may be more optimal. Current work suggests that grand coalitions following principles of Integrated Water Resource Management (IWRM) may provide the most efficient means of distributing the benefits and costs of water resource cooperation equitably across riparian states. Using a theoretical framework developed by Just and Netanyahu (1998 ), we find that the arrangement of partial coalitions that exists in the La Plata Basin is preferable to a grand coalition because of its higher degree of stability. Finally, given the ways in which these partial coalitions are beginning to incorporate IWRM techniques, gaining experience and international recognition, we consider whether it is likely that partial coalitions will lead to a grand coalition in the foreseeable future.