The Impact of Pricing Policies on Irrigation Water for Agro-Food Farms in Ecuador
Abstract
:1. Introduction
2. Case Study
Baseline Scenario
3. Materials and Methods
3.1. The AFSAM
- = Crop area under irrigation in hectares
- = Water requirement in m3 per year
- = Work requirement in wages per production cycle
- = Types of irrigation systems (gravity and sprinkling, respectively), and dry land for production without irrigation
- , and = Availability of resources on the land (water, and labor respectively)
- = Ground surface under irrigation
- = Observable surface
- = Disturbance factor
- Standard deviation of income. It is assumed that the attitude toward risks is analyzed through the mean and variance income framework
3.2. Water Cost Scenarios
- The first proposal is the increase of a fixed price related to the value of t USD/hectare. There, S represents the irrigated crop by hectare. This first scenario involves an increase in the rate of irrigation per hectare. The optimization model analyzes five different stages, when USD/ha.
- The second proposal simulates a volumetric pricing policy, where t < , and an increase in water value USD/m3 when q in the water demand (m3) was observed, where t = 0.003 USD/m3.
- The third proposal is a water block application. The value of t increases in each block (). Each block has a different price, where has the lowest cost and the highest. In the water cost is = 0.0005 USD/m3; in the second water block, , = 0.001 USD/m3; in the third block, = 0.01 USD/m3; and, in the fourth block, = 0.1 USD/m3.
4. Results
4.1. Survey Results
4.2. Economic Impacts
4.3. Implementation of a Fixed Cost Policy
4.4. Implementation of the Volumetric Price Policy
4.5. Increasing Block Rate
5. Discussion and Conclusions
Acknowledgments
Author Contributions
Conflicts of Interest
Abbreviation
AFSAM | Agro-Food System Analysis Model |
Eto | Food and Agriculture Organization |
FAO | Food and Agriculture Organization |
GAMS | General Algebraic Modeling System |
ISUB | Irrigation System Users Board |
IWRM | Integrated Water Resources Management |
MJCS | Manuel de Jesus Calle Irrigation System |
NIAR | National Institute of Agricultural Research |
NIMH | National Institute of Meteorology and Hydrology |
O&M | Operation and maintenance |
PMP | Positive Mathematical Programming |
PWC | Water Public Enterprise |
SENESCYT (acronym in its Spanish) | Secretariat of Higher Education, Science, Technology and Innovation of Ecuador |
WRCA | Water Regulation and Control Agency |
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Crop | Irrigation | Income (USD/ha/Year) | Costs (USD/ha/Year) | Irrigation Cost (USD/ha/Year) | Net Profit (USD/ha/Year) |
---|---|---|---|---|---|
Banana | Gravity | 10,125.78 | 5682.00 | 260.78 | 4183.00 |
Sprinkler | 10,658.71 | 5544.00 | 274.50 | 4840.21 | |
Rainfed | 6928.16 | 5700.00 | 166.00 | 1062.16 | |
Cacao | Gravity | 2204.98 | 1634.00 | 226.51 | 344.48 |
Sprinkler | 2477.51 | 1499.00 | 254.50 | 724.01 | |
Rainfed | 1734.26 | 1560.00 | 134.00 | 40.26 | |
Rice | Gravity | 3964.56 | 2536.00 | 254.35 | 1174.22 |
Rainfed | 2962.53 | 2500.00 | 140.00 | 322.53 | |
Sugar cane | Gravity | 1989.68 | 1100.00 | 148.00 | 741.68 |
Rainfed | 1447.04 | 1257.00 | 101.96 | 88.08 |
Model | Policy | Cost Irrigation Equation |
---|---|---|
Baseline | S * t | |
With Policy | Fixed Increase | S * |
Volumetric | q * | |
Blocks | * |
Fixed Increase | Block Rate | Volumetric Rate | |
---|---|---|---|
Standard deviation | 0.011 | 0.131 | 0.068 |
Average | 1.447 | 1.344 | 1.374 |
Median | 1.447 | 1.296 | 1.383 |
Price (USD/m3) | Volumetric Pricing | |||
---|---|---|---|---|
Rice | Banana | Cacao | Sugar Cane | |
0.003 | 0.0 | 0.0 | 0.0 | 0.0 |
0.012 | −0.1 | 0.0 | 0.0 | 0.0 |
0.024 | −1.0 | 0.0 | −0.1 | 0.0 |
0.048 | −1.0 | −0.2 | −0.3 | −0.8 |
0.096 | −1.0 | −0.5 | −1.0 | −0.9 |
0.192 | −1.0 | −0.7 | −1.0 | −1.0 |
0.384 | −1.0 | −0.9 | −1.0 | −1.0 |
0.768 | −1.0 | −1.0 | −1.0 | −1.0 |
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Franco-Crespo, C.; Sumpsi Viñas, J.M. The Impact of Pricing Policies on Irrigation Water for Agro-Food Farms in Ecuador. Sustainability 2017, 9, 1515. https://doi.org/10.3390/su9091515
Franco-Crespo C, Sumpsi Viñas JM. The Impact of Pricing Policies on Irrigation Water for Agro-Food Farms in Ecuador. Sustainability. 2017; 9(9):1515. https://doi.org/10.3390/su9091515
Chicago/Turabian StyleFranco-Crespo, Christian, and Jose Maria Sumpsi Viñas. 2017. "The Impact of Pricing Policies on Irrigation Water for Agro-Food Farms in Ecuador" Sustainability 9, no. 9: 1515. https://doi.org/10.3390/su9091515