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Using Water Allocation in Israel as a Proxy for Imputing the Value of Agricultural Amenities

Erez Yerushalmi ()

Ecological Economics, 2018, vol. 149, issue C, 12-20

Abstract: This paper uses the water allocation economy in Israel as a proxy for imputing the value of agricultural amenities. A general equilibrium model is developed, and incorporates agricultural amenities as byproducts of agricultural production, water trade channels, and multiple water types. The premise is that until a decade ago, water policy in Israel was interlinked with agricultural land-use policy. Integrating a Monte-Carlo analysis, the model searches for a baseline minimum value of agricultural amenity that makes household, in the counterfactual scenario, indifferent between the administrative and market mechanisms. The minimum imputed value is around 109% agricultural output. The intuition is that the gains in economic welfare, from improved water use efficiency, are offset by the losses in social welfare due to a reduction in available agricultural amenities.

Keywords: Agricultural amenities; Administrative water allocation; Water market; General equilibrium; Israel (search for similar items in EconPapers)
JEL-codes: D58 Q12 Q25 Q28 Q56 O21 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:ecolec:v:149:y:2018:i:c:p:12-20