Cost-Effectiveness of Water Conservation Measures: A Multi-level Analysis with Policy Implications

Groundwater in Spain, as in other arid or semiarid countries worldwide, has been intensely used for the expansion of irrigated agriculture. This booming development has induced a remarkable socioeconomic development in many rural areas but has produced far-reaching environmental problems. In the Spanish Western La Mancha Aquifer, the excessive, and sometimes illegal, water abstraction for irrigation agriculture has resulted in the Aquifer’s overexploitation and has been responsible of the degradation of the associated wetlands “Tablas de Daimiel”, an internationally reputed, Ramsarnominated aquatic ecosystem. To undertake this analysis, a mathematical programming model has been developed to simulate farmers’ behaviour and their responses to different water policy scenarios. Specifically, the policy simulations selected are: alternative water pricing schemes (uniform volumetric and block-rate water tariffs), water use quota systems and water rights market. Results show that controlling illegal water mining is a necessary condition but it is not sufficient to recover the aquifer. Consequently, other measures will be necessary for an effective water management in this area. Among these, the block-rate water pricing scheme seems the most cost-effective system to reach the goal of aquifer sustainability but will entail important income losses in several farms. Therefore, we cannot conclude that a unique water conservation policy instrument will be the best overall solution for all types of holdings that will respond to efficiency as well as to equity considerations. It seems reasonable to make a combination of the tools proposed, even including additional measures that promote an environmental protection and develop sustainable agricultural systems.