Agriculture Reference
In-Depth Information
the farmer. This mechanism determines the magnitude of impact of pricing on water
demand and the heterogeneity that could be found within an irrigation scheme. This is
well illustrated in the following literature.
In the Charente river basin (Montginoul & Rieu, 2001), pricing water appears to be a
convenient instrument for water demand management Figure 1) as an increase in water
price lowers significantly the irrigation water use due to high price elasticity of demand.
Nevertheless, even the very first increase in prices has a significant impact on farmers'
revenues which is unacceptable. This led the local authorities and the water agency to
abandon the pricing instrument and shift to a quota system.
Figure 1. Water demand and farmers revenue in Charentes river basin (France)
m 3 /ha
2 500
2 000
1 500
1 000
Water demand curve
500
0
Euro/m 3
0
0,15
0,30
0,45
KEuro/m 3
21
18
15
12
9
Agricultural revenue curve
rerrreverevenuarmer
6
3
0
Euro/m 3
0
0,15
0,30
0,45
Source : Cemagref.
Towards a balanced budget
In many situations the first objective of the water manager is to balance its budget
through water pricing. This is particularly true when there large hydraulic works that
induce high fixed costs as they have been designed to meet long-term water demands.
The implementation of the Water Framework Directive and the cost recovery principle
could make this situation more frequent, depending on the interpretation of the term
“adequate cost recovery”.
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