Iddo Kan

Drainwater Management for Salinity Mitigation in Irrigated Agriculture

Salinity and drainage management options include source control, reuse, and evaporation ponds. This article identifies efficient strategies to maintain hydrologic balance in closed drainage basins and evaluates their impact on regional agricultural profits. Theoretical analysis suggests that economic efficiency requires acknowledgment of the nonseparability between water use and land value. Empirically, our solution involves a modest amount of source control, a substantial amount of reuse, and the elimination of evaporation ponds often associated with large environmental damages, while maintaining grower income. Various policy instruments and options are introduced and discussed, including a system of drainwater charges, marketable permits, and land retirement.

On A Political Solution to the NIMBY Conflict

Scale economy in the construction and operation of public facilities, such as landfills, calls for cooperation among communities to build a common facility (Arthur O’Sullivan, 1993). Such a facility is a mixture of a public good and a private bad and, hence, leads to strong opposition by communities to locate it in their vicinity (Bruno S. Frey et al., 1996). This is one of the most serious environmental concerns of recent years, and is known as NIMBY: “not in my backyard.” In this paper we study the hypothesis that a democratic political process creates an adequate mechanism for the resolution of the NIMBY conflict. The intuitive explanation is simple. A NIMBY conflict is likely to induce lobbying and symmetric pressures by all threatened communities in the relevant region. As is well known (Gene M. Grossman and Elhanan Helpman, 1994), when subject to symmetric pressures, politicians stick firmly to principles and function most efficiently. The existing literature on the siting of noxious facilities focuses mainly on normative issues, such as welfare-maximizing siting via decentralized community-based mechanisms (e.g., Howard Kunreuther and Paul R. Kleindorfer, 1986; Robert C. Mitchell and Richard T. Carson, 1986; and Deborah Minehart and Zvika Neeman, 2002). Evidently, however, such mechanisms have seldom been practiced (e.g., Stephen K. Swallow et al., 1992). The current study adopts a positive approach, integrating a political-economic framework with a model of a competitive real estate market. In the theoretical section, a government of a linear two-city economy determines the location of a noxious facility, which affects the equilibrium in the real estate market and induces the spatial distributions of price and population. The government is subject to political pressures by city-level lobbies of landowners (both landlords and home owners). In general, the political equilibrium and the socially optimal siting differ. However, the more equitable the distribution of landownership in the region, the smaller the difference. At the limit, when property distribution is perfectly equitable and all cities participate in the political arena, the government locates the facility at the socially optimal site. The analysis proceeds by identifying additional conditions under which the political equilibrium siting coincides with the socially optimal location and, with an empirical analysis. In the empirical section, the theoretical framework is extended to account for a multiple-city region, and is calibrated to assess the prospects of the political system for resolving the NIMBY conflict in the context of landfill-siting in Israel. It is shown that if all cities in the region form political lobbies and the politicians are not extremely corrupt, the political siting is close geographically to the socially optimal location, and the difference entails a less than 0.1 percent reduction in social welfare. Moreover, even if the formation of lobbying in the region is incomplete, as long as the weight the politicians assign to social welfare is larger than 0.7, the proximity of the politically and socially optimal locations is preserved. We interpret the above results as supportive of the hypothesis of an effective political solution to the NIMBY conflict.

One size fits all? An assessment tool for solid waste management at local and national levels

As environmental awareness rises, integrated solid waste management (WM) schemes are increasingly being implemented all over the world. The different WM schemes usually address issues such as landfilling restrictions (mainly due to methane emissions and competing land use), packaging directives and compulsory recycling goals. These schemes are, in general, designed at a national or regional level, whereas local conditions and constraints are sometimes neglected. When national WM top-down policies, in addition to setting goals, also dictate the methods by which they are to be achieved, local authorities lose their freedom to optimize their operational WM schemes according to their specific characteristics. There are a myriad of implementation options at the local level, and by carrying out a bottom-up approach the overall national WM system will be optimal on economic and environmental scales. This paper presents a model for optimizing waste strategies at a local level and evaluates this effect at a national level. This is achieved by using a waste assessment model which enables us to compare both the economic viability of several WM options at the local (single municipal authority) level, and aggregated results for regional or national levels. A test case based on various WM approaches in Israel (several implementations of mixed and separated waste) shows that local characteristics significantly influence WM costs, and therefore the optimal scheme is one under which each local authority is able to implement its best-fitting mechanism, given that national guidelines are kept. The main result is that strict national/regional WM policies may be less efficient, unless some type of local flexibility is implemented. Our model is designed both for top-down and bottom-up assessment, and can be easily adapted for a wide range of WM option comparisons at different levels.

Agricultural Rodent Control Using Barn Owls: Is It Profitable?

We develop a model to evaluate the profitability of controlling rodent damage by placing barn owl nesting boxes in agricultural areas. The model incorporates the spatial patterns of barn owl predation pressure on rodents, and the impact of this predation pressure on nesting choices and agricultural output. We apply the model to data collected in Israel and find the installation of nesting boxes profitable. While this finding indicates that economic policy instruments to enhance the adoption of this biological control method are redundant, it does support stricter regulations on rodent control using rodenticides.

INTEGRATION OF GENERAL AND PARTIAL EQUILIBRIUM AGRICULTURAL LAND-USE TRANSFORMATION FOR THE ANALYSIS OF CLIMATE CHANGE IN THE MEDITERRANEAN

This study presents an internal modification of a dynamic computable general equilibrium model, ICES, employing inputs from a partial equilibrium model for the agricultural sector, VALUE. The aim is to quantify and analyze the medium-term socio-economic consequences of projected climate change. The methodology is innovative as it combines state-of-the-art knowledge from economic and biophysical sources and is demonstrated in application to two Mediterrenean countries: Israel and Italy. The information from the VALUE model was incorporated into the ICES economic model to improve the agricultural production structure. The new land allocation method takes into account the variation of substitutability across different types of land use. It captures agronomic features included in the VALUE model. This modification gives a better representation of heterogeneous information of land productivity to the economic framework. Climate impacts and policy evaluation with ICES are reinforced due to the more refined system of land allocation. This exercise is original in its ability to base the analysis on empirically estimated parameters rather than on assumptions, as in other studies of this kind. Notably, we suggest diverse land Constant Elasticity of Transformation (CET) frontiers for two main ecological regions in the Mediterranean basin for a more accurate representation of agronomic characteristics. Using the modified ICES model we evaluate climate change impact on agricultural production in the Mediterranean region.

Assessing Climate Change Impacts on Water, Land-Use and Economic Return in Agriculture

We develop a regional scale economic model for analyzing climate-change impacts on agriculture. Non-linear production functions describing yield responses to land allocation, water application and water salinity are integrated into a mathematical programming model. The responses to water quantity and quality are estimated by the use of scientific-based models simulating equilibrium in the root zone among plants water uptake, soil salinity and soils water content. Internalization of land allocation among crops is based on Howitts PMP calibration approach (1995). The model, therefore, enables assessment of climate-change impacts on optimal agricultural management, where adaptation is considered endogenously with respect to both the extensive and intensive margins. The model is applied to the case of Israel. We divide the country into 14 regions and estimate regional future precipitation levels by implementing a climate-change down-scaling procedure. Then the model computes optimal agricultural managements under these projected rainfall levels. The results indicate a reduction of about 20% in statewide annual agricultural net-revenues by the year 2100 in comparison to 2002. Land allocated to field crops is increased on the expense of forages and vegetables. The shares of field crops and forages in the agricultural irrigation-water allotment are increased, while that of vegetables declines.

The Cost of Covering Costs: A Nationwide Model for Water Pricing

This study offers a high-resolution model of nationwide water supply. The model is sufficiently detailed to represent all main water sources in an economy, the principal segments of the conveyance system, urban, industrial and agricultural demand regions, and various water types, including fresh, saline and recycled. Calibrated for Israeli 2010 data, we find that the optimal extraction of fresh water is only 2% larger than the total observed supply from those sources. However, for some specific sources, the deviation between optimal and observed quantities is significant. Assuming average constant recharge, the optimal aggregated desalination is 57% of the 2010 desalination capacity and only 33% of the present desalination capacity. Even with an assumed 40% decline in recharge (for example, due to climate change), the model uses only 50% of the present desalination capacity. This may suggest that the construction of desalination facilities in Israel, which began in 2005, could have been delayed. The model establishes a comprehensive system of pumping levies and user fees that support the optimal allocation. However, due to considerable scale economies, the average cost is almost 50% larger than the marginal cost. The implications are that the welfare cost of the recent Israeli Balanced Budget Water Economy legislation is more than 100 million USD per year, about 10% of the water economy share of the GDP.

Economic Impacts of Water Scarcity Under Diverse Water Salinities

Exploitation of alternative water sources is expected to grow in the decades to come in water-stressed countries with fast population growth, especially in regions where a further decline of natural freshwater availability is expected due to climate change. Increasing utilization of non-freshwater usually leads to salinity build-up in fields and water sources as well as accumulation of various pollutants — both having a considerable impact on the suitability of non-freshwater for irrigation due to constraints associated with crop salinity tolerance and food safety regulations. We developed a linked Computable General Equilibrium (CGE) — farm-level model of a water economy with representation for multiple water types characterized by different qualities. We employ the model to assess the impact of water shortage on the Israeli economy, where steadily growing water scarcity leads to an increasing utilization of alternative water sources. We simulate water shortage scenarios based on the Long Term National Master Plan for The Water Economy developed by the Israeli Water Authority (IWA). The linked CGE — farm-level model provides a mechanism for estimating the Constant Elasticity of Substitution (CES) rates between different irrigation water types used in agriculture. This mechanism accounts for the effects of salinity on yields and takes into consideration food safety regulations for irrigating crops with treated wastewater. We demonstrate that, in contrast to previous studies, CES rates between different water types are not identical. The CES rates obtained in our study have relatively low values, which can be attributed to the constraints associated with crop salinity tolerance and food safety regulations. Our results reveal that water shortage can lead to a significant decline of Israel’s GDP, where a considerable part of the decline is attributed to the decrease in agricultural outputs. The magnitude of the impact depends on the underlying assumptions regarding future desalination capacity. To further study the effect of desalination, we run simulations under various desalination levels and examine its impact on the GDP. We also examine the extent to which the impact of water shortage is sensitive to CES rates between different irrigation water types.

Corporatization and Price Setting in the Urban Water Sector Under Statewide Central Administration: The Israeli Experience

As in many European countries, all water sources in Israel are public property, and are centrally managed by the government. This is to facilitate correction of market failures associated with externalities, natural monopolies and equity considerations. The economic policy instrument (EPI) considered here comprises two aspects of the centralized approach: (1) an institutional reform: local services that were formerly provided by municipal water departments became the responsibility of corporations; (2) a price-scheme reform: urban water prices are set by the regulator subject to the constraint of overall cost-recovery at the national and municipal levels, combined with an egalitarian policy; the latter is realized in identical municipal end-users tariffs. We evaluate the environmental, economic and institutional aspects of these reforms, and point out two main conclusions. First, with respect to EPI implementation from the regulator perspective, the lesson learned can be summarized by the phrase “grasp all, lose all.” EPI reformation, in this case the establishment of regional corporations, should take account of unattainable objectives: “sanitizing” the political factors from involvement. The second lesson is associated with the challenge of designing a pricing mechanism that simultaneously achieves several potentially contradicting targets: costs recovery, creation of incentives for efficiency, and equality. Also here the mechanism was distorted by political pressures. According to the social norms as they are reflected by the resultant policy, equality overwhelms efficiency.

Two-Pronged Control of Natural Resources: Prices and Quantities with Lobbying

This study offers an extension of Grossman and Helpman (1994) political-economic framework to model an industry regulated by an integrated system of both direct and market-based policies. The model is incorporated into a normative theoretical analysis and serves as a basis for structural econometric estimations. Utilizing disaggregated data on agriculture and irrigation in Israel in the mid-1980s, when water was regulated by both quotas and prices, the model’s political and technological parameters are structurally estimated and used to assess the relative efficiencies of quotas, prices, and an integrated regulation regime.