Dynamics of Water Allocation: Tradeoffs between Allocator’s and Farmers’ Benefits of Irrigation Practices

Abstract

Water dependencies and agricultural expansion have led to a remarkable increase in water demand. Proper management of water supply and demand is a crucial challenge in planning for sustainable development. Because the prevailing water allocation system in developing countries is based on low tariffs, particularly in the agricultural sector, a robust accounting cannot be implemented. The objective of this paper is to investigate the economic value of a change from gravity to drip irrigation using groundwater resources. It is implemented in the Rafsanjan plain, in central Iran, where the irrigation practices lead to unsustainable use of groundwater. In this area, the allocator (water authority board) is a governmental agency that can receive funding from other governmental agencies to affect water use policies. Considering the benefits accrued to the allocator and farmers (benefit for all agricultural water uses), the optimal investment in converting gravity irrigation systems to drip irrigation is determined. An economic framework is proposed with two simulation models [Water Evaluation and Planning (WEAP) and Vensim] to evaluate the dynamics of the water use benefits. According to the results, with expenditures of $65 million/year over a 25-year horizon, the discounted benefit to allocator and farmers in the year 2011 would be $60.48 and $911.9 million, respectively. The framework outlined can provide a mechanism to allocate water in a more precise way as well as to determine the economic value of water in the agricultural sector. The proposed methodology can be applied to other geographic settings.