Agriculture Reference
In-Depth Information
Thus, the figures show that it is possible to establish option
agreements related to rainfall conditions (in drought years) between
farmers and electricity producers that have the effect of reducing the
agricultural losses without diminishing the hydropower profits. These
agreements represent a type of drought insurance for agriculture, implying
an increase in their effective allocations of water stored in the reservoirs at
the beginning of the irrigation season as a result of a reduction in the
hydropower allotment in the non irrigation period.
Whilst it would be interesting to study the specific legal form in
which this agreement could be reached, this lies beyond the scope of our
chapter. Here, we only aim illustrating that such an arrangement is, at least
on the basis of real data, interesting for both parties.
3.4. Case 2: Reallocation in response to extension in surface
area under irrigation
In this case, we assume that there is a plan to double the surface area under
irrigation in system 2, while leaving the distribution of crops unchanged.
This supposes a permanent deficit of for the agricultural sector
operating in this system. In fact, it is not possible to meet the additional
requirements created by these newly irrigated areas on the basis of the
water supply available in an average year, taking into account current
hydropower time-distribution allotments.
In such circumstances, we cannot speak of a lack of rainfall, but
rather of an increase in requirements that exceeds the possibilities of the
current water rights system to satisfy them. Under market conditions this
deficit could be met through a relative increase in the price of the good,
which is now more scarce. However, given the earlier mentioned
institutional structure that operates in Spain, it cannot be expected that such
a change will be introduced, at least in the short term.
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