Agriculture Reference
In-Depth Information
have chosen a situation in which two users (agriculture and hydropower)
compete for the water resources of a river in both space and time.
Specifically, we consider what would be the optimum allocation of
water between the users when there is a scarcity of the resource. That is to
say, we try to determine how water should be allocated in order to increase
the profit, or mitigate the losses, derived from that scarcity. This process
for the optimisation of the agents' profits (in our case, those of farmers and
hydroelectric plants) is conditioned by institutional as well as hydrologic,
geographical and time aspects. We construct an optimisation model that
incorporates the legal order of priority over the water held by each user and
places their requirements in space and time.
The empirical analysis is focused on analysing the requirements
(from cities, minimum flow, farmers and hydroelectric plants) associated
with two interrelated reservoirs managed in a co-ordinated form. This
approach allows us to extend the range of real situations that can be
simulated. In this chapter we simulate two specific situations of
competition for a scarce resource, namely a reduction in streamflow and an
increase in irrigation requirements. The results demonstrate the existence
of incentives for the hydroelectric plants to review their operational plan in
such a way that, at least in some cases, they can assign their rights to
agriculture. In these circumstances, we find that making property rights
more flexible increases the joint profits of the two types of users.
We believe that an approach of this type would allow us to
advance in the necessary integration of the spatial characteristics of water
an in economic context. Nevertheless, we clearly cannot forget some
important aspects which, although not reflected here, represent natural
extensions of this work. Thus, and given the importance of certainty of
water supply in the operation of the model, it would be interesting to
introduce probability functions of the different levels of upstream flows as
well as to obtain the most beneficial allocations in this probabilistic
context. Bearing in mind this uncertainty, such allocations would be
understood as those which suppose higher profits. Similarly, a
consideration of the quality of the water used, both in the definition of
property rights and in the allocation process, constitutes a further logical
extension of this chapter.
ACKNOWLEDGEMENTS
This work has been partially funded by Project P52/97 of the
Diputación General de
Aragón,
Zaragoza (Spain) and Project CICYT 221-94.
The authors appreciate the comments and suggestions of Professor Julio Sanchez-Choliz, of
the Department of Economic Analysis, and two anonymous referees. Any remaining errors
are, of course, our own.
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