Modeling farm-level adoption of deficit irrigation using Positive Mathematical Programming

Irrigated agriculture in the European Union (EU) is currently adapting to new conditions including the principle of the full recovery of water service costs, the reduction of water availability and the increasing variability in the prices of agricultural products. This has fostered an increasing number of economic analyses to investigate farmers' behaviour by means of mathematical programming techniques including Positive Mathematical Programming (PMP) models. However PMP models generally consider only activities observed in the reference period even if, under new policies and market conditions, farmers can adopt irrigation techniques they have not used previously. In particular, under increasing water costs or decreasing water availability, farmers can introduce Deficit Irrigation (DI) techniques that might not have been profitable earlier. We propose an extension of the PMP approach to include DI techniques not observed in the reference period. These alternative techniques are identified by means of a crop growth model developed by the FAO. We apply our methodology to a Mediterranean area using three sets of simulations involving: increases in water costs, reductions in water availability, and changes in the prices of the products obtained from irrigated crops. Lacking observations of alternative irrigation techniques, our approach captures potential technology adjustments and assesses the impact of changes in water policy and market conditions in a better way. Simulation results show that increasing water costs do not motivate adoption of DI techniques. Rather, farmers are induced to save water by switching from full irrigation to deficit irrigation when water availability is reduced or the prices of irrigated crops are increased. (C) 2009 Elsevier B.V. All rights reserved.