ESTIMATING THE EFFECT OF WATER CHARGE INTRODUCTION AT SMALL-SCALE IRRIGATION SCHEMES IN NORTH WEST PROVINCE, SOUTH AFRICA

Stijn Speelman, Jeroen Buysse, Aymen Frija, Marijke F.C. D'Haese and Luc D'Haese

No 6646, 107th Seminar, January 30-February 1, 2008, Sevilla, Spain from European Association of Agricultural Economists

Abstract: In South Africa water law has recently changed, adopting the principle of water as an economic good, thus levying charges on its use. For small-scale irrigators this is an important change, because currently their water use is entirely subsidized. In the coming years, subsidies will gradually decrease and an essential expected benefit of this policy change is that water use efficiency will rise, leading to reduced consumption and possible reallocation of the water saved. The exact impact of the water pricing policy on the irrigation water use or on the farmers' production system is however unclear. This study introduces a new methodology, based on data envelopment analysis, that allows estimating the effects on the agricultural production process and water demand of introducing or raising a water price. It is revealed that a large majority of the farmers does not adjust water use. Production costs however were shown to increase significantly.

Keywords: Production Economics; Resource /Energy Economics and Policy (search for similar items in EconPapers)
Pages: 13
Date: 2008
New Economics Papers: this item is included in nep-afr
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaa107:6646

DOI: 10.22004/ag.econ.6646

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