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Economy-wide gains from decentralized water allocation in a spatially heterogenous agricultural economy

Published online by Cambridge University Press:  11 May 2005

XINSHEN DIAO ,
TERRY ROE  and
RACHID DOUKKALI
XINSHEN DIAO
Affiliation:
International Food Policy Research Institute, 2033 K Street, Washington DC 20006, USA. E-mail: x.diao@cgiar.org
TERRY ROE
Affiliation:
University of Minnesota, Department of Applied Economics, 1994 Burford Ave. St Paul, MN 55108, USA. E-mail: troe@umn.edu
RACHID DOUKKALI
Affiliation:
Institut Hassan II, Rabat, Morocco. E-mail: mr.doukkali@iav.ac.ma
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Abstract

This paper analyzes the economy-wide gains obtainable from the allocation of surface irrigation water to its most productive use, and evaluates a decentralized mechanism for achieving this result in a spatially heterogeneous environment. The focus country for the analysis is Morocco. The analysis is based on a general equilibrium model that, in addition to the rest of the economy, captures 82 agricultural production activities, 66 of which are in seven separately identified water districts that span the entire country. The results suggest that a decentralized water trading mechanism could increase agricultural output by 8.3 per cent, affect the rental rates of other agricultural inputs at the national level, including labour, and have economy-wide effects that entail a decline in the cost of living, an increase in aggregate consumption, and expansion of international trade.

Type
Research Article
Information
Environment and Development Economics , Volume 10 , Issue 3 , June 2005 , pp. 249 - 269
Copyright
© 2005 Cambridge University Press

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Footnotes

The authors acknowledge financial support from the World Bank project titled Macro-Micro Linkages of Irrigation Water Management, and from the Economic Development Center, University of Minnesota. Appreciation is expressed to Ariel Dinar, Yacov Tsur, and three anonymous referees for their contribution to this effort.