Economics at your fingertips  

Designing contracts for irrigation water under asymmetric information: Are simple pricing mechanisms enough?

Davide Viaggi (), Meri Raggi, Fabio Bartolini () and V. Gallerani

Agricultural Water Management, 2010, vol. 97, issue 9, 1326-1332

Abstract: A fertile discussion is developing in the EU regarding the application of the Water Framework Directive (60/2000) (WFD), the legislative act that provides the framework for water regulation in Europe and emphasises the role of economic instruments in water policy. The objective of this paper is to provide an evaluation of different instruments designed to deal with the management of water for agriculture, in the perspective of WFD implementation and agricultural price scenarios. The paper focuses on the regulation of mixed source unmetered water and carries out a comparison of flat rate versus differentiated contracts as the policy instrument. The analysis is based on a combination of linear programming and a Principal-Agent model. The empirical model is applied in an agricultural area of Northern Italy. The results show the feasibility of incentive-oriented policy instruments, even in the less sophisticated form of flat rate area payments. They also show the relevance of agricultural market scenarios and policy scenarios in the design of the optimal policy instruments. The adoption of such instruments, however, could require a revision of the role of different institutions involved in water management.

Keywords: Water; pricing; Principal-Agent; Water; Framework; Directive; Northern; Italy; Menu; of; contracts (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Agricultural Water Management is currently edited by B.E. Clothier, W. Dierickx, J. Oster and D. Wichelns

More articles in Agricultural Water Management from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().

Page updated 2021-04-07
Handle: RePEc:eee:agiwat:v:97:y:2010:i:9:p:1326-1332