Water use efficiency and public goods conservation: A spatial stochastic frontier model applied to irrigation in Southern Italy. (February 2021) - Laureti, Tiziana
Abstract: Water used for irrigation is essential for global food production. Increased water scarcity, due to climate change, is a constraint to agricultural development, especially in arid and semi-arid areas. This increases pressure on agriculture which often manages water inefficiently and competes with other sectors for water use. Enhancing farmers' production efficiency may lead to substantial water savings and conservation. Public sector is called to play a role in water governance and to introduce appropriate multilevel regulatory and incentive measures for better water management. This work applies a spatial stochastic frontier model to the case of high water-demanding fruit and vegetable crops in the Apulia region of Southern Italy, where water is scarce due to semi-arid climate and erratic rainfall. Using cross-sectional data from the EU Farm Accountancy Data Network, this work incorporates firm specific heterogeneity into technical efficiency analysis and implements an autoregressive specification of the inefficiency component. Results support the hypothesis that spatial heterogeneity exists in on-farm efficiency of irrigated crop production and is adequately captured by the spatial stochastic frontier model approach. Technical efficiency of farms with similar structural and management characteristics greatly varies across crops and geographical areas, because of the different natural resource endowment and agro-climatic factors. Policies providing incentives to on-farm adoption of modern water-saving technologies and measures to promote small family farm activities could effectively contribute to water conservation goal, but they should be well-articulated to account for agriculture spatial diverseness. Highlights: Water is a critical resource for agriculture especially in arid and semi-arid areas. Enhancing farmers' technical efficiency (TE) may lead to substantial water savings. Farmers need to be encouraged and guided through appropriate policy initiatives. A spatial frontier model is used for analyzing TE of high water-demanding crops. Measuring TE without considering spatial dependence may be misleading.