Determining farmers’ willingness to pay for irrigation water in the alentejo region (Southern portugal) by the residual value method

Abstract

This paper aims to determine farmers’ willingness to pay for irrigation water, using the residual value method, for the most representative crops at six Irrigation Communities from the Alentejo region, southern Portugal. The main objective of this assessment was to determine the value that farmers would be able to pay for the water to irrigate different crops at different locations, and to show that this approach can be used to provide information about farming economic sustainability and provide support on if crop prices need to be revised or if a national policy should be conceived to cover for farming costs. The results show that vegetables and fruit trees have the highest Residual Value of Water (RVW), while Wheat, Sunflower, Fodder crops, Semi-intensive Olive Orchards and Rice tend to have an RVW lower than the current variable irrigation water price. The results also show that, while, for Melon, Tomato, Onion, Super-high-density Olive Orchards, Peach and Almonds, both yields and price may decrease significantly, allowing one to save for faming inputs, Sunflower and Rice would require an increase in yields or prices to cover for the irrigation water price.