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1、AgriculturalWaterManagement43(2000)219±238Theimpactofwater-pricingpolicyinSpain:ananalysisofthreeirrigatedareasab,*J.Berbel,J.A.GoÂmez-LimoÂnaDepartmentofAgriculturalEconomicsE.T.S.I.A.M.UniversityofCoÂrdoba,SpainbDepartmentofAgriculturalEconomics,E.T.S.II.AA.UniversityofValladolid,Ad
2、vaMadrid57,34071Palencia,SpainAccepted2April1999AbstractLinearprogramming(LP)hasbeenwidelyusedtosolvecompanyresourceallocationproblems.Thetechnique'sabilitytopredicthowcompanieswilladjusttochangesinavarietyofexogenousfactorsiswellknown,andwhenusedatcompanylevel,itenablesustoavoidaggre
3、gationproblems.Thedecision-maker'sobjectiveinthistypeofresearchistomaximizeprofitestimatedasgrossmargin.WeapplytheLPmodeltothreefarmsinthreedifferentirrigationunitsthat,webelieve,providearepresentativesampleofSpanishirrigatedagriculture.Infocusingonthegoalsofthisresearchwestressthatwa
4、terpricingasasingleinstrumentforcontrolofwateruseisnotavalidmeansofsignificantlyreducingagriculturalwaterconsumption.Thisisbecauseconsumptiondoesnotfalluntilpricesreachsuchalevelthatfarmincomeandagriculturalemploymentarenegativelyaffected.Ifwaterpricingisselectedasapolicytool,amongthe
5、consequencesforagriculturalsectorwillbethat:farmincomewilldecreasebyaround40%beforewaterdemanddecreasessignificantly.Theimpactofthisreductiononruralareasthataredependentonirrigatedagriculturewillbecatastrophic.Secondlytherewillbeareductioninthenumberofcropsavailableforfarming,withthec
6、onsequenceofasmallernumberofalternativesandgreatertechnicalandeconomicvulnerabilityoftheagriculturalsector.Finallywhenwaterconsumptiondecreasesasaconsequenceofsubstitutionofcropswithhigherdemandsforwater(cotton,sugarbeet,onions,corn)therewillbeasignificantlossofemploymentbothdirectlyo
7、nfarmsandindirectlyonprocessingfacilities.TheseconclusionsaredrawnfromouranalysisofthreeirrigationunitsinSpain,butwebelievethattheyofferarealisticestimateofpolicyimpactsontheirrigatedsectorofSpanishagriculture.Evenifpriceincreasesarenotasuitablepolicybecauseofthehighnegativeimpact,wes
8、ugges
