WATER POLICY AND THE SUSTAINABILITY OF IRRIGATED SYSTEMS IN ITALY

The management of water resources is today one of the main issues in most countries. In Italy, as in many other European countries, irrigation is the main sector using water and hence it is at the centre of the water policy agenda. Water management for irrigation requires suitable policy tools able to meet social objectives and private behaviour. The legal framework in the European Union is today faced with the new Water Framework Directive (60/2000), that sets up new criteria for water management, regulation and pricing. Among other things, the Water Framework Directive introduces the principle of full cost recovery and the polluter pays principle for water users. For many areas of Italy, this may be a significant shift compared to present payment criteria, based on traditional rights, area prices, and only a partial cost recovery from final users. The objective of this paper is to analyse the problem of water regulation for irrigated agriculture, through a simulation model based on the integration of a mathematical decision making model and a principal agent. The methodology allows to quantify water demand and optimal regulation from the point of view of the policy maker. The results show major impacts of water availability and prices on farm income. The adoption of a mix of pricing instruments related at the same time to charges associated to crop mix, water consumption and pollution can significantly improve water policy efficacy.