19 Sep 2011

Agricultural water prices and markets in Europe

I recently gave a talk at an EU-sponsored session on agricultural water pricing in Warsaw. In my short (13 min) talk, I touched on the difference between the price and value of water and cautioned against setting prices in a bureaucratic manner that fails to reflect supply and demand.

Audio [6 MB MP3] and slides [PPSX]

For the rest of my talk, I described how an all-in-auction could be used to re-allocate water among farmers and find the right price for water. AiAs can, of course, be used to sell a limited amount of water to outside uses, e.g., urban or environment.

Here is a simple introduction to the AiA [pps]. I'd love to hear your comments (is it clear? add/subtract material? any applications in your area?)

Many talks at the session provided details of the struggle to limit agricultural consumption of water (via, e.g., illegal wells/boreholes). There was a lot of rhetoric about "protecting a traditional way of life," but those thoughts are increasingly mismatched with reality.

This background information page gives many details on agricultural water prices and policies in the EU.

Since we're on the topic of agricultural water, I have two other links of interest:

WaterCanada just published my short essay -- "Irrigation: Not as wasteful as it seems" [PDF]

Here is a link to several presentations [in Spanish] on water markets in Spain WITH DATA.

Bottom Line: Farmers control most of the water in the world, but they will not for long if they ignore outside demands for water. They need to price water in line with scarcity, and the easiest way to find a price is with a robust market that can eventually integrate demand from other farmers, cities and/or the environment.