Assessing the Impact of Alternative Water Pricing Schemes on Income Distribution

Authors

  • Giacomo Giannoccaro,

  • Maurizio Prosperi,

  • Giacomo Zanni

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    • Giacomo Giannoccaro is based in the Department of Agricultural Economics, Sociology and Policy, University of Cordoba, Campus de Rabanales C5, 14014 Cordoba, Spain. E-mail: es2gigig@uco.es for correspondence. Maurizio Prosperi is at the Department of Production and Innovation in Mediterranean Agriculture and Food System (PrIME), University of Foggia, Via Napoli 25, 71122 Foggia, Italy. Giacomo Zanni is a Professor in the Department of Engineering, University of Ferrara, Via Saragat, 1, 44122 Ferrara, Italy. The authors thank two anonymous referees and the editor for insightful comments on an earlier draft of this article.


Abstract

The reform of water pricing policies may represent an effective instrument for enhancing the efficient use of water resource. However, policy makers fear that a change in the pricing methods may cause income loss for some farmers, and that this income inequality may generate public discontent and policy inertia. The aim of this paper was to compare some pricing methods in order to measure their effects on income distribution. The analysis focuses on the income distribution among different types of farms, and the income distribution between different social groups (landowners, capitalists and workers) in the short term. A linear programing model based on expected utility theory is used to take into account the effect of commodity prices and rainfall variability, which are among the most relevant factors affecting farmers’ income. According to the findings, water pricing schemes do not affect the income distribution among farm types, although a significant impact emerges on the distribution among social groups, and in particular on the wages of temporary workers.

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