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Assessing the Effects of Surface Water and Groundwater Policies

Author(s): A Detailed Hydro-Economic Model Applied to Brazil
Congress: 2008
Author(s): Marcelo Torres, Marco Maneta, Richard Howitt, Wesley Wallender, Luis Bassoi, Lineu Rodrigues, Vosti Stephen
University of California, Davis Brazilian Agricultural Research Enterprise (Embrapa)

Keyword(s): Water Policy, Hydro-Economic Model, Brazil
AbstractIntroduction: Policymakers, managers of water use associations, and many others in developing countries are considering policy actions that will directly or indirectly change the costs and availability of groundwater and surface water for agricultural users. While in many cases such actions may bring about welcomed increases in water use efficiency, little is known about the likely effects of changes in irrigation costs or water access on farmer behavior, or on farmer incomes in the short or long runs, and virtually nothing is known about the detailed immediate or knock-on effects on water resources that such policy actions might cause. Objectives: This paper reports the results of research aiming to fill these large scientific gaps by developing a detailed hydrologic model and a detailed economic model of agriculture in the context of the Buriti Vermelho sub-catchment area of the São Francisco River Basin in Brazil, and ‘linking’ and using these linked models to assess the effects of surface water pricing policies and surface water use regulations on area under plow, product mix, production technology, and farm income. Methods: A spatially explicit, farm-level, positive mathematical programming model capable of accommodating a broad array of farm sizes and farm/farmer characteristics is developed to predict the effects of alternative water policies and neighbors’ water use patterns on agricultural production. Special attention is given to precisely defining and estimating the distinct variable costs (including labor and electrical energy costs) and capital costs of surface water and groundwater, which are considered perfect substitutes for irrigation. Shadow values for non-marketed inputs (land, family labor, and water) are estimated in the first step of the modeling process. A high- resolution, spatially distributed hydrologic model (MOD-HMS) is developed to simulate three-dimensional, variably -saturated subsurface flow and solute transport. Subsurface flow is simulated using the three-dimensional Richards equation while accounting for: a) application of water at the surface, b) precipitation, c) soil evaporation and crop transpiration, and d) agricultural pumping. Results: All farmers adjust to changes in surface water prices and surface water use regulations, but the nature and extent of adjustments vary depending, among other things, on previous investments in irrigation infrastructure and established cropping patterns, and on the cost of substituting groundwater for surface water in irrigation; the hydrologic model provides temporally and spatially explicit estimates of surface water and groundwater availability. Finally, farmer adjustments reduce the negative effects on farm income of all water management policies. Conclusions: Effectiveness, efficiency, and equity issues associated with alternative water policies are discussed.
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