This work presents models that characterize the relationships between quantity and quality of irrigation water application, and agricultural production and the environment. A comprehensive modeling approach addressing both the benefits of irrigation and the potential negative effects is introduced. Physical-biological concepts are combined with economic and engineering principles to demonstrate the usefulness of the model for analyzing various water management and policy issues. Decision makers on all levels should find the modeling approach interesting and useful in the management issues from the farm to national levels.

This book deals with the economic modelling of water at the global, national and sub-national levels. It presents a multi-faceted analysis and, while it outlines the theories behind various models, its main purpose is to analyse policy issues and present insights arising from modelling, including a chapter analysing the macroeconomic implications of climate change. Arguably the most compelling reason for publishing a book on the economic modelling of water arises from the fact that agriculture accounts for approximately 70% of water used for economic purposes, while only contributing 4% of global income. Given that water is an essential commodity, this discrepancy may in part be symptomatic of an undervaluation of water due to immature and incomplete markets. In turn, this undervaluation has led to an ongoing misallocation of water. When economic models include water accounts that feed into production functions, they model impacts on the marginal product of water. Policies that improve the link between the marginal product and price of water will improve water allocation, while advanced economic models such as those presented here can enhance our ability to explore the possible impacts of improved policy.

Water resource management is complicated in practice on account of the diverse nature of the resource and its many uses. This volume reports recent economic research on the theory, practice, and policy of water management. It is distinguished by the number and the range of the applications it considers. Chapters consider problems in the estimation of water demand in residential and agricultural contexts. Efficiency and externality considerations are considered in chapters concerning common aquifers as well as domestic conservation. Management policies are discussed in regard to chemical contamination, reservoir construction, and industrial regulation. The volume is intended for resource economists, especially those concerned with the management of water resources. It provides insights into the latest research on the economic issues concerning this important resource.

The book details the innovative TERM (The Enormous Regional Model) approach to regional and national economic modeling, and explains the conversion from a comparative-static to a dynamic model. It moves on to an adaptation of TERM to water policy, including the additional theoretical and database requirements of the dynamic TERM-H2O model. In particular, it examines the contrasting economic impacts of water buyback policy and recurring droughts in the Murray-Darling Basin. South-east Queensland, where climate uncertainty has been borne out by record-breaking drought and the worst floods in living memory, provides a chapter-length case study. The exploration of the policy background and implications of TERM’s dynamic modeling will provide food for thought in policy making circles worldwide, where there is a pressing need for solutions to similarly intractable problems in water management.

Much hope has been vested in pricing as a means of helping to regulate and rationalize water management, notably in the irrigation sector. The pricing of water has often been applied universally, using general and ideological policies, and not considering regional environmental and economic differences. Almost 15 years after the emphasis laid at the Dublin and Rio conferences on treating water as an economic good, a comprehensive review of how such policies have helped manage water resources an irrigation use is necessary. The case-studies presented here offer a reassessment of current policies by evaluating their objectives and constraints and often demonstrating their failure by not considering the regional context. They will therefore contribute to avoiding costly and misplaced reforms and help design water policies that are based on a deeper understanding of the factors which eventually dictate their effectiveness.

The report aims to provide a conceptual framework to address food security under conditions of water scarcity in agriculture. It has been prepared by a team of FAO staff and consultants in the framework of the project "Coping with water scarcity - the role of agriculture", and has been discussed at an Expert Consultation meeting organized in FAO, Rome, during the period 14-16 December 2009 on the same subject. It was subsequently edited and revised, taking account of discussions in the Expert Consultation and materials presented to the meeting. The purpose of the Expert Consultation was to assist FAO to better design its water scarcity programme. In particular, the experts were requested to provide recommendations on the range of technical and policy options and associated principles that FAO should promote as part of an agricultural response to water scarcity in member countries. The document offers views on the conceptual framework on which FAO's water scarcity programme should be based, proposes a set of definitions associated with the concept of water scarcity, and indicates the main principles on which FAO should base its action in support to its member countries. At the meeting, experts were requested to review the draft document and provide feedback and recommendations for its finalization. Issues that were addressed in discussions included: 3⁄4 Water scarcity: agreement on key definitions. 3⁄4 The conceptualisation of water scarcity in ways that are meaningful for policy development and decision-making. 3⁄4 The quantification of water scarcity. . 3⁄4 Policy and technical response options available to ensure food security in conditions of water scarcity. . 3⁄4 Criteria and principles that should be used to establish priorities for action in response to water scarcity in agriculture and ensure effective and efficient water scarcity coping strategies.

This report calls on policy makers to recognise the issues at stake in water resource management in agriculture and gives them the tools to do so, offering a wealth of information on recent trends and the outlook for water resource use in agriculture.