19 September 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.

2 comments:

  1. The challenge for Netherlands is to really help reduce costs of food globally by showcasing success stories like http://plantlabs.nl and enabling technology transfer faster at affordable rates.

    Are any studies for Water available for Sanitation and reduction of pollution of water at low costs. Also great EU research which enables the reduction of (Good) water from being wasted must be highlighted more often and again it all boils down to empowering the lesser privileged globally 2 other examples of great EU innovation are http://www.knowaste.com and http://xerosltd.com/ both from the UK. Hope this helps out and please do inform me about ways to reduce costs of food, energy and water globally and the tech transfer costs-Holland is an awesome countries and its citizens truly help out when ever possible.

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  2. I absolutely agree with your point about water auctions. The later the start of the adaptation to use the water producing more value the harsher the consequences will be for farmers.

    We also recommended auctions in the national WFD plan, in some of the sub-surface resources where the water balance shows scarcity.

    Albeit AiA may be a step mentally too big for the stakeholders, so we recommended some separated sub-market with pre assigned quantities. It lessen the fear that somebody will buy out the others quickly. But after some years in operation the price differences will show the opportunity cost of the segmentation, and the social gain allocating water from one sub-market to the other. (As you can imagine, nothing has started yet.)

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