Coping with drought with innovative pricing systems: the case of two irrigation water management companies in France |
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Authors: | Yoro Sidibé Jean‐Philippe Terreaux Mabel Tidball Arnaud Reynaud |
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Institution: | 1. LAMETA‐Université Montpellier 1, Montpellier Supagro‐Dpt SESG‐2, place Pierre Viala‐34060 Montpellier Cedex 2‐ France;2. Irstea, UR ADBX, 50 avenue de Verdun, F‐33612 Gazinet Cestas, France;3. LAMETA‐INRA, Montpellier Supagro‐Dpt SESG 2, place Pierre Viala‐34060 Montpellier Cedex 2‐France;4. LERNA‐INRA, Université Toulouse I de Sciences sociales, 21, allée de Brienne, France |
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Abstract: | In recent years, France has been facing particularly severe drought periods especially in summer. In a country where agriculture is the largest water user, some irrigation management companies have implemented innovative pricing systems to handle this situation. The objective of this article is to analyze the impact of these new management systems on farmers’ incomes, the revenue of the management companies, and the amount of water used. To do that, we develop a methodology using a stochastic model that simulates the representative farmer's optimal behavior in a context of climatic variability. An empirical application is made with a crop growth model and data collected from the Midi‐Pyrenees region. The results show that using these specific nonlinear pricing systems allow irrigation water managers to reduce the impact of drought on production. Moreover, the type of pricing implemented depends on the characteristics and capabilities of the water company. More particularly, these pricing systems can be used to anticipate agricultural water demand in order to avoid imbalance with water availability. |
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Keywords: | Q15 Q25 D81 Climatic variability Drought Nonlinear pricing Irrigation water |
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