Research Problem
Current precipitation predictions based upon geostatistical models of the Mediterranean region indicate that the majority of climate change scenarios predict a reduction in precipitation over the coming decades. The Lasithi prefecture on the Greek Island of Crete, has the lowest observed annual precipitation of all Crete prefectures. (Koutroulis, Tsanis, Daliakopoulos, & Jacob (2013). Lasithi is the most vulnerable Crete prefecture to the predicted stressors of climate change. A key response is adopting proactive agricultural water management policies. Agricultural water use could be reduced by between 30%-70% while still maintaining baseline agriculture yields (Udias, Pastori, Malago, Nikolaidis, & Bouraoui, 2018). With agriculture using 78% of Crete’s total water usage, this is the most significant leverage point in responding to future supply fluctuations. Currently, Crete utilizes negative incentives (volumetric water usage fees) to encourage reduced usage. The above factors influence stakeholder interactions with strong stakeholder ties being vital to effective water management solutions (Tzanakakis, Angelakis, Paranychianakis, Dialynas, & Tchobanoglous, 2020).
Broad Review of Previous Studies
A quick dive into the literature demonstrates that there is a clear need for regionally governed, multi-stakeholder processes to establish responsive water management policies that lead to a reduction in water usage (Tzanakakis, et al., 2020). Weak stakeholder interactions contribute to ineffective policy and the resultant decline in water usage efficiency (Kapetas, Kazakis, Voudouris, & McNicholl, 2019). Studies conducted around the Mediterranean have also noted that pricing policies are a potential key driver but have shown limited effect when used as a punitive mechanism to motivate water usage efficiencies (Expósito & Berbel, 2017; Bartolini, Bazzani, Gallerani, Raggi & Viaggi, 2007).
Deficiencies in the literature
Broadly, water consumption is a complex issue, sensitive to regional differences in economic, cultural, and environmental conditions (Johansson, Tsur, Roe, Doukkali, & Dinar, 2002). Crete’s unique position as an island, as one of the oldest civilizations, and a region that recovers nearly four times as much water revenue above the cost of water distribution position it as a case study that doesn’t neatly fall within the scope of pertinent literature on incentives (Garrido, & Calatrava, 2010). Most research involves the addition of negative incentive systems (volumetric fees) to reduce water usage. We see Crete’s unique circumstances as an opportunity to explore the effect of reducing negative incentive structures.
Purpose Statement
The primary purpose of this proposed study is to measure changes in Lasithi farm water usage in response to novel forms of reducing negative incentive water pricing policies. The secondary purpose is to evaluate how the implementation of pricing interventions would impact farmer/agency interactions.
Literature Review
24 different climate scenarios project water scarcity for the Mediterranian region. There is an estimated future 10% to 74% deficit in water availability based upon projected precipitation and demand (Koutroulis, Tsanis, Daliakopoulos, & Jacob (2013). This projected pattern differs from historical records which showed no statistically significant pattern of precipitation change between 1948 and 2012 (Agou, Varouchakis & Hristopulos, (2019).
Governance frameworks that differentiate based upon socio-economic demands, need to be regionally adaptive to future changing climatic conditions. And “water volumetric pricing policies should be used by local agencies to improve water use efficiency in the fields, by controlling the use of water….” (Tzanakakis, et al., 2020).
An OECD case study of a handful of countries identified that supplying water to the Crete agricultural industry costs €8,690,616 whereas farmers pay €32,000,000 in tariffs per year. This is a 368.21% Total Cost Recovery compared to Greece’s water district average Total Cost Recovery of 54%. Crete stands alone in recovering over 200% of costs. (Garrido & Calatrava, 2010). This observational study highlights the financial opportunity to reduce negative incentives (fees) to motivate reduced water usage. And yet, it doesn’t address the intricacies of the true transaction costs associated with transitioning between stages of evolution into novel water management policies. These transactional costs introduce externalities that aren’t necessarily reflected in pricing policies and perhaps are more relevant to the strength of farmer/agency stakeholder interactions (Garrick, Whitten, & Coggan, 2013).
Weak stakeholder ties to water management agencies can lead to a lack of compliance and hence an increased risk of wasteful water usage practices. This paper identifies the need to not only evaluate the quantitative effect of reducing negative incentive pricing policies but perhaps more importantly to evaluate the relationship between farmers and the regional water agencies to understand the nature of those relationships for effective multi-level management (Kapetas, Kazakis, Voudouris, & McNicholl, 2019). These findings advocate for an interactive methodological approach whereas Amador, Sumpsi, & Romero (1998), evaluated a non-interactive method. In their non-interactive approach, they found that working capital, risk, and level of profitability were strong predictors of water usage behavior. My proposed project intersects with those three predictors but differs in its approach to engage farmers through price policy interventions and qualitative evaluations pre and post intervention.
Methodology
This paper proposes a two staged explanatory sequential mixed methods approach, using quantitative assessment of changes in water usage followed by a qualitative assessment of the changes in the quality and type of interactions between farmers and water agencies.
The goal of our study is to determine whether novel pricing policies will influence overall water usage to address the risk of future declining precipitation. Secondary to this goal is to evaluate multi-stakeholder interactions in service of developing adaptive water management policies. Measuring farmer/agency interactions will be critical to inform future processes of a more broad application of any price policy solutions identified in the quantitative stage of this study.
This paper seeks to answer the following questions:
Quantitative research question:
Will reducing negative incentives(volumetric usage fees) result in a decrease in water usage?
Qualitative research question:
Does reduction of negative incentives lead to increased farmer interaction with water management agencies?
Mixed-methods research question:
How does the reduction of negative incentives increase the likelihood that farmers decrease water usage and increase the frequency of interaction with water management agencies?
In the first phase, I hypothesize that opportunities to reduce negative incentives will reduce water usage and in the second phase, a desire to ensure those financial benefits, farmers will increase the frequency of interaction with management agencies. Alternate outcomes are that no change in water usage will occur nor any change in interactions between farmers and water regulatory agencies. Even with the opportunity to reduce negative incentives, interactions could decrease simply out of a farmer's desire to minimize time spent within bureaucratic systems.
Our population of individuals are farmers in the Lasithi prefecture of Crete. Our treatment group will be a random sample of farmers who will have access to novel reduction of negative incentives associated with water usage. The control group will be a random sample of farmers who operate within existing policies. Independent variables are access to the reduction of negative incentives or not. Dependent variables are volumetric changes in water usage and the number, quality, and type of interactions with water management agencies. Potential moderating variables are the size/type/financial solvency of farms, seasonal supply and demand of water, prior relationship with water management agencies, and accessibility of agencies to farmers.
References:
Agou, V. D., Varouchakis, E. A., & Hristopulos, D. T. (2019). Geostatistical analysis of precipitation in the island of Crete (Greece) based on a sparse monitoring network. Environmental monitoring and assessment, 191(6), 353.
Amador, F., Sumpsi, J. M., & Romero, C. (1998). A non-interactive methodology to assess farmers' utility functions: An application to large farms in Andalusia, Spain. European review of agricultural economics, 25(1), 92-102.
Bartolini, F., Bazzani, G. M., Gallerani, V., Raggi, M., & Viaggi, D. (2007). The impact of water and agriculture policy scenarios on irrigated farming systems in Italy: An analysis based on farm level multi-attribute linear programming models. Agricultural systems, 93(1-3), 90-114.
Expósito, A., & Berbel, J. (2017). Why is water pricing ineffective for deficit irrigation schemes? A case study in southern Spain. Water resources management, 31(3), 1047-1059.
Garrido, A., & Calatrava, J. (2010). Agricultural water pricing: EU and Mexico. Consultant report prepared for the OECD. OECD, Paris.
Garrick, D., Whitten, S. M., & Coggan, A. (2013). Understanding the evolution and performance of water markets and allocation policy: A transaction costs analysis framework. Ecological Economics, 88, 195-205.
Johansson, R. C., Tsur, Y., Roe, T. L., Doukkali, R., & Dinar, A. (2002). Pricing irrigation water: a review of theory and practice. Water policy, 4(2), 173-199.
Kapetas, L., Kazakis, N., Voudouris, K., & McNicholl, D. (2019). Water allocation and governance in multi-stakeholder environments: Insight from Axios Delta, Greece. Science of the Total Environment, 695, 133831.
Koutroulis, A. G., Tsanis, I. K., Daliakopoulos, I. N., & Jacob, D. (2013). Impact of climate change on water resources status: A case study for Crete Island, Greece. Journal of hydrology, 479, 146-158.
Tzanakakis, V. A., Angelakis, Α. N., Paranychianakis, N. V., Dialynas, Y. G., & Tchobanoglous, G. (2020). Challenges and Opportunities for Sustainable Management of Water Resources in the Island of Crete, Greece. Water, 12(6), 1538.
Udias, A., Pastori, M., Malago, A., Vigiak, O., Nikolaidis, N. P., & Bouraoui, F. (2018). Identifying efficient agricultural irrigation strategies in Crete. Science of the Total Environment, 633, 271-284.
Varela‐Ortega, C., Sumpsi, J. M., Garrido, A., Blanco, M., & Iglesias, E. (1998). Water pricing policies, public decision making and farmers' response: implications for water policy. Agricultural economics, 19(1-2), 193-202.