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Water 2011, 3(3), 906-922; doi:10.3390/w3030906

Economic Effects of Legislative Framework Changes in Groundwater Use Rights for Irrigation

1,* , 2
1 Department of Agricultural Economics, Sociology and Policy, University of Cordoba, Campus de Rabanales, Edificio C5, 14014, Cordoba, Spain 2 Department of Production and Innovation in Mediterranean Agriculture and Food System (PrIME), University of Foggia, Via Napoli 25, 71122 Foggia, Italy 3 Department of Engineering (EnDIF), University of Ferrara, Via Saragat 1, 44122 Ferrara, Italy
* Author to whom correspondence should be addressed.
Received: 23 May 2011 / Revised: 23 August 2011 / Accepted: 30 August 2011 / Published: 19 September 2011
(This article belongs to the Special Issue Water Policy)
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In most countries, groundwater resource is a public good, and the entitlement of use rights by the public authority to final users differs according to a country-specific legislative framework. In Italy, groundwater extraction has been regulated through non-tradable private licenses. At present, the public authority needs to reform the current legislative framework, in order to comply with the Water Framework Directive, aimed at the enhancement of the efficiency of the resource use. This research analyzes the effects of reforming the current framework based on non-tradable use rights, by comparing two different liberalization scenarios: an intra-sector market, and a regional market. Although positive economic benefits are generally expected from the liberalization of use rights at aggregated level, we want to analyze whether effects of the legislative framework causes uneven changes on some farm groups. The empirical case study refers to the Fortore river basin (South of Italy), where groundwater covers about 50–80% of current needs, and informal (though illegal) water markets across neighbor farmers already exist. From the findings, there is no evidence that the exchange liberalization of groundwater use rights leads to gains in terms of the value added and the farmer’s revenue. In addition, in the case of an auction system regulated by the public authority, farmers whose water productivity is higher may be able to gain, while others may suffer some losses. In this case, resistances from farmers’ associations towards the legislative framework reform may arise.
Keywords: water markets; groundwater; Water Framework Directive; economic assessment water markets; groundwater; Water Framework Directive; economic assessment
This is an open access article distributed under the Creative Commons Attribution License (CC BY) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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Giannoccaro, G.; Prosperi, M.; Zanni, G. Economic Effects of Legislative Framework Changes in Groundwater Use Rights for Irrigation. Water 2011, 3, 906-922.

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