Policy Instruments for Irigation Water Management: Flat Pricing, Volumetric Pricing and Quota Regulations

Abstract

In the fifty years since the foundation of the European Community, Europe has evolved in many fields. From being exclusively concerned with economic integration – reflected by policies to increase agricultural productivity and improvement of intra-communitarian trade –, nowadays, the European Union is gradually advancing towards a political integration, in the direction of common environmental values and towards the sustainability of natural resources. While in the Treaties of the European Community of Steel and Coal (1952) and Rome (1957) there is no direct reference to environmental issues, since the Treaty of Amsterdam this problematic issue has been a central theme of EU development, being clearly defined as one community objective to be reached. Frequently, in sustainability concepts only the degradation and misuse of natural resources are taken in account. This paper follows a different concept, where the discussion of sustainability is transferred to and placed in the context of a wider notion, integrating the political, social and economic dimensions of agricultural sustainability. Having this framework in mind, this paper analyses the major implications that an environmental policy, such as the EU Water Framework Directive, may have when different policy measures are adopted. To accomplish this goal, the irrigated region of Baixo Alentejo, Portugal, was taken as a case study, using as a policy analysis tool a Multi-Objective programming model, based on the Multi-Attribute Utility Theory and on goal programming techniques, reproducing farmers’ preferred behavior. The study focuses on the adoption and comparison of volumetric pricing and flat pricing policy measures, as well as on a consumption quota associated with the use of water resources.