Economic Analysis of Water Markets in the Spanish Agricultural Sector: Can They Provide Substantial Benefits?

Abstracts

In normal years, Spain’s total rainfall that flows into rivers, lakes and aquifers amounts to 110,000 million m³. Substantial structural efforts to increase and stabilize supplies that date back to the Roman Empire domination of the Iberian peninsula, currently allow the control of about 40 percent of that volume of water (45,000 million m³). Until very recently, water policies were virtually limited to supplying water for residential consumption and the agricultural sector. Other objectives, such as streamflow benefits, were overridden by the need to meet those increasing demands. Presently, Spain devotes 80 percent of all available water to irrigate about 3.3 million hectares, and the remaining 20 percent to urban and industrial consumptive uses. Rainfall patterns across the country differ in such a magnitude that the northern basins get 18 times more water than the driest, southeastern basins. Moreover, the latter are the regions where irrigated agriculture produces the most valuable crops and where population demands for water during the tourist and driest season are two or three times larger than in winter.

This work is based on results obtained in my doctoral dissertation. I am indebted to Prof. Carlos Romero for his comments and suggestions. Funding from the Spanish Ministry of Agriculture is also acknowledged.