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New directions in the economics of agricultural water conservation

Susanne M. Scheierling's picture

A challenging area in agricultural water management is the assessment of policy and investment options in irrigated agriculture for conserving water and adapting to increasing water scarcity, in particular when the linkages to groundwater resources and their management are to be considered and incorporated. 

However, this is an increasingly important area of research for a number of reasons.  First, irrigated agriculture accounts for about 70% of global freshwater withdrawals, and is a major contributing factor to the water scarcity situation in many countries.  Second, with almost a quarter of freshwater withdrawals for irrigated agriculture being made up of groundwater supplies—corresponding to 70% of total groundwater withdrawals—, agricultural water use is also a major contributing factor to aquifer overexploitation.  And, third, surface water and groundwater are closely linked in most parts of the world, with groundwater discharge contributing to the base flow of streams and surface water contributing to groundwater recharge, and these interactions are intensified by human action, in particular water withdrawals for irrigated agriculture.  Even in cases where irrigated agriculture depends mostly on surface water, groundwater impacts therefore need to be accounted for when assessing water conservation efforts (and vice versa).

New approaches in water resource economics

Susanne M. Scheierling's picture
In many parts of the world, changing demand and supply patterns are contributing to an increasing physical scarcity and competition for water resources. Historically, new demands have been met by developing additional supplies—with the incremental cost of water remaining relatively constant over time due to the ready availability of water development project sites to meet growing demands. As the water economy moves from an expansionary to a mature phase, incremental costs are sharply rising, and interdependencies among users and uses are greatly increasing. With this move, the issues to be addressed by water economists tend to become more pressing, broader and more complex. While in the expansionary phase structural or engineering approaches to water management tend to be the main focus, in a maturing water economy nonstructural or institutional options for solving water problems receive increasing attention. In particular, resource allocation and valuation issues move to the forefront of economic inquiry.

Why water presents special challenges: a brief rationale for water resource economics

Susanne M. Scheierling's picture
Photo: Christopher Walsh/World Bank Group

For the first time, the International Water Resource Economics Consortium (IWREC) held its annual meeting at The World Bank from September 7-9, 2014. The meeting, an annual gathering of water economists, serves as a place to exchange the latest information and research findings in the field.