From 29-30 January 2015, Ca' Foscari University of Venice, The Energy and Resources Institute (TERI) and the United Nations Environment Programme (UNEP) will host the GGKP's Third Annual Conference on the theme of "Fiscal Policies and the Green Economy Transition: Generating Knowledge – Creating Impact" in Venice, Italy.
Dionisio Pérez-Blanco will present his paper 'Water charging and water saving in agriculture. Insights from a revealed preference model in a Mediterranean basin' at the GGKP's Annual Conference on January 29 in the session 'C2: Water pricing for sustainable water management'. Dionisio Pérez-Blanco is a Research Fellow at the Euro-Mediterranean Center for Climate Change and FEEM.
1. Briefly describe the topic and conclusion of your paper.
The large irrigation expansion of the last 50 years has increased pressures on water resources in EU Mediterranean basins. EU authorities have encouraged water charging as a means to reduce water use and thus promote water saving. I find, though, that water charging may not be as appealing as it seems: in the profitable Segura River Basin in SE Spain, for example, higher charges lead to a reduction of the gross value added without significant changes in water use. I conclude that water charging may still be useful to better manage water resources if it is used to discriminate prices, promoting the use of relatively abundant resources (e.g. desalinated water) instead of those already scarce and more vulnerable (e.g. groundwater). In the case study area, where desalination plants are available and underused, this is certainly an option.
2. Through your research, what do you find as the role for fiscal policy in the transition to a green economy?
The current water crisis is largely one of governance. While the systematic use of engineering solutions has developed technical water management to a very large extent, the social, political, institutional and economic aspects of water management are still treated in an incipient form, with major problems persisting. Developing efficient and effective economic instruments, including fiscal policies, is necessary to align individual and collective decisions and overcome this challenge.
3. What are the key policy implications of your research?
Against the current water crisis there are no silver bullets. Although the EU has sometimes promoted water pricing/charging as a panacea, my research shows that this is not necessarily the case: contrary to what the Water Framework Directive asserts in its art. 9, in our case study area water charging does not contribute to EU environmental objectives unless water charges increase by 600% -which seems rather implausible. Water pricing is certainly one of the most powerful instruments we have at hand to revert current and unsustainable trends in water use, and we need to use it wisely -before blindly applying any policy, a careful assessment is necessary, based on the local conditions and the water management practices already in place.
4. What do you hope to gain from the GGKP’s 3rd Annual Conference?
Insights from some of the best experts in the field and visibility to my research.
5. Which session at the conference are you interested in attending and why? (See programme here).
i) Plenary sessions, to better know the opinion of the experts; ii) A3, because it is connected to my area of research; iii) B3, to attend the presentation of my colleague Elena Verdolini; iv) C2, where one of the speakers is a renowned expert in my area of research (and well, the other is me); v) D3, to attend the presentation of my colleague Claire Gavard; and vi) E1, because I find critical and challenging the development of effective and efficient incentives for green growth in developing economies.
6. What are the next steps for your research?
The current version of the model estimates the environment-market tradeoffs of water charging at a local and basin level (i.e. the agricultural districts of the Segura River Basin). It would be useful to know how these impacts translate in the macroeconomy, for example combining the current model with a CGE model.
Also, I plan to continue exploring other economic instruments for water management, such as insurance or water markets. The wider the range of policies for which information is made available, the more likely it becomes to improve current water management practices.