Is irrigation driven by the price of internationally traded agricultural products?

Catherine Laroche-Dupraz () and Angela Cheptea
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Catherine Laroche-Dupraz: SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - INSTITUT AGRO Agrocampus Ouest - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement
Authors registered in the RePEc Author Service: Catherine Laroche Dupraz

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Abstract: A recent trend of literature investigates how international trade compensates or accentuates the differences in countries' endowments in water resources and whether trade regulation should be used to improve the use of water resources at the global level. We develop a simple model establishing a positive link between the demand for irrigation water of agricultural producers and the international price of irrigated crops. Unlike previous works that focus on the cost and scarcity of water resources, we emphasize the role of international trade in the allocation of water resources in agriculture. We test our model empirically using data on 243 irrigated crops exported by 183 countries, and find that countries' irrigation behavior is strongly linked to the global price of crops. The export price effect is stronger when countries are net exporters of irrigated crops and weaker for cereals that constitute a pillar of most countries' domestic food security.

Keywords: Agri-food products; International trade; Virtual water; Water resources; Irrigation (search for similar items in EconPapers)
Date: 2021-01-08
New Economics Papers: this item is included in nep-agr and nep-int
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Published in Q Open, 2021, 1 (1), pp.1-18. ⟨10.1093/qopen/qoab002⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03227465

DOI: 10.1093/qopen/qoab002

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