The Impact of Pricing Policies on Irrigation Water for Agro-Food Farms in Ecuador

The institutional reform of the State established in Ecuador during the last decade has aimed at regaining control of specific sectors such as the consumptive use of water. Since 2014, regulation, consumption, and use of water, especially in agriculture, have been analyzed through policies and fisca...

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Bibliographic Details
Published in:Sustainability 2017-08, Vol.9 (9), p.1515
Main Authors: Franco-Crespo, Christian, Sumpsi Viñas, Jose
Format: Article
Language:English
Subjects:
Agricultural economics
Agricultural production
Agriculture
Computer simulation
Consumptive use
Costs
Economic conditions
Economic impact
Environmental regulations
Impact analysis
Irrigation
Irrigation systems
Irrigation water
Mathematical programming
Pricing policies
Sugarcane
Sustainability
Water consumption
Water costs
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Summary:The institutional reform of the State established in Ecuador during the last decade has aimed at regaining control of specific sectors such as the consumptive use of water. Since 2014, regulation, consumption, and use of water, especially in agriculture, have been analyzed through policies and fiscal instruments. This research presents itself in the context of the simulation of scenarios using positive mathematical programming, to analyze the economic impact of pricing policies on agro-food farms. Policies of fixed costs, water blocks, and volumetric prices are evaluated. The results show that the existing fixed costs do not reduce water consumption. In contrast, the scenarios of water blocks and volumetric prices impact on the behavior of farmers. The tendency of water consumption to the application of volumetric prices demonstrates that banana farms have a greater tolerance to the increase of water costs. On the other hand, the response to an increase in cost in the case of cacao, sugar cane, and rice depends on the productivity of farmers. The negative effects can lead to the abandonment of agriculture. Thus, volumetric policies are more efficient in reducing water consumption as well as in recovering the costs of the irrigation system.
ISSN:2071-1050
2071-1050
DOI:10.3390/su9091515