Irrigation water pricing instruments: a sustainability assessment

The Water Framework Directive (WFD) requires all EU member states to implement water tariffs to recover the costs of water services. This paper analyzes the potential consequences of different instruments for irrigation water pricing (area, volumetric, two-part tariff and block-rate), studying their impact on the sustainability of irrigated areas. The application performed focuses on the Campos district in the Spanish province of Palencia, using simulation models based on positive mathematical programming to simulate farmers' behavior in response to the above-mentioned pricing instruments. A multidimensional set of sustainability indicators (economic, social and environmental) for each instrument is obtained, making it possible to construct a composite indicator for irrigated agriculture (CIIA) in order to measure the overall sustainability performance of irrigated farms. Results show that pricing irrigation water will have a negative impact on overall sustainability, since economic (profitability) and social (generation of employment) sustainability will decline, while only a slight improvement in environmental sustainability will be obtained. However, we show that in order to fulfill WFD requirements, block-rate pricing results in high rates of public-sector revenues derived from irrigation water payments and promotes a significant reduction in the demand for irrigation water with the lowest reductions in farm sustainability measured in terms of the CIIA.