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Political economy of energy subsidies for groundwater irrigation in semi-arid area in Argentina

IWRA World Water Congress 2017 - Cancun Mexico
4. Water policy and governance

Keyword(s): political economy, water-energy nexus, groundwater, strategic behaviour
Article: Oral:


A.                Purpose

Since 1884, institutions commit to legislation that recognizes water as the key-resource for economic development. In terms of surface water, Mendoza is an exceptional case regarding organization and empowerment of stakeholders. However, groundwater management has showed flaws in conservation, both quantity and quality. This paper seeks to describe the economic incentives and behaviour of local stakeholders towards the exploitation of groundwater resources. The analysis will focus on the economic and political framework for energy use.

Main research questions are:

a.       Are water and energy policies compromising the quality and availability of irrigation water?

b.      What are the stakeholders’ incentives to consider the environmental trade-offs of groundwater use?

Energy subsidies for agricultural irrigation have relied too long as current policy suffering political maneuvers every time they will be withdrawn. The main hypothesis is that energy subsidies for agriculture irrigation and current legislation drive farmers’ behaviour towards an over-exploitation of the aquifer.

In the arid province of Mendoza, groundwater irrigation is vital for agricultural activities in certain areas. Political will to improve profitability of small producers has distorted economic incentives and led to the creation of power asymmetries among stakeholders and decision makers. Jointly, a political and economic analysis are carried below to unmask the reform arena of public policies that link water and energy in the agricultural sector.

B.                Methodology

A policy assessment and appraisal of institutions was carried. Following a tripod framework for political and economic analysis, the institutional settings of the water-energy nexus were revised, and the incentives and behavior of stakeholders were analyzed.

C.                Findings and implications

Findings indicate joint implications of water and energy policies for groundwater availability. The resulting table of analysis deploys more policy tools oriented to the demand side and relevant participation of collective management within the framework. During the last 15 years, policies have not provided consistent economic incentives to agriculture producers to consider environmental degradation of groundwater resources.

The DGI remains as the highest authority in terms of resource administration, information systems and control of the water system. The resulting analysis in table III deploys of more policy tools oriented to the demand side and relevant participation of collective management within the framework.

Conceiving a subsidy to extract water may improve the living standard of less profitable farmers is not the right orientation to improve their livelihood. On the contrary, when policies are not complemented under instructive and participatory approaches that improve water management; farmers will continue to rely on their traditional irrigation practices with a marginal productivity of water constant and similar cost of production.

Jointly, the review of the institutional settings and the political disputes about water resources quality and management reveal the public sensibility on the pollution of common pool resource, as the Carrizal aquifer. In particular, when quality degradation is not diffuse but local.

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