Iddo Kan, 1,2 Mickey Rapaport-Rom, 1 David Haim 1 & Mordechai Shechter 1

1. יום עיון בנושא "מים מותפלים לשימוש חקלאי בערבה"7.10.2008 שימוש חקלאי במים:שיקולי כמות, מליחות ועלות Iddo Kan,1,2 Mickey Rapaport-Rom,1 David Haim1 & Mordechai Shechter1 1. Natural Resource & Environmental Research Center, University of Haifa, Israel 2. Department of Agricultural Economics & Management, The Hebrew University of Jerusalem, Israel Funding sources • The GLOWA project – (Germany & Israel) • The CIRCE project (FP6) – European Council • The Governmental Authority for Water and Sewage (Israel) • The Ministry of Environmental Protection (Israel)

2. Part 1 Presenting the VegetativeAgriculturalLand-UseEconomic Model Part 2 Applications to the ARAVA region

3. Objectives of VALUE • Investigate impacts of various factors (e.g., prices, water availability, water quality) on the agricultural water use, land use and farmers’ profits. • Estimate agricultural demand functions for freshwater, treated-wastewater and brackish water.

4. Positive Mathematical Programming (PMP) Model

5. Main Features of the PMP model • The model attempts to mimic farmers’ decision making with respect to allocation of land and water among crops. • Optimality = maximum profits. • Assuming that farmers aware of yield-responses to water applications and water quality. • Adaptation to changes in various factors is by changing the set of decision variables: irrigation and land allocation among crops.

6. Our Requirements from the PMP model: • Production functions represent responses validated by scientific-based agronomic models/experiments. • The model reproduces observed management in a base year – 2002 in our case. • Calibration is based on a solid micro-economics theory. • The model is based on aggregated regional data from official public-open information sources.

7. Developing the Model

8. Regional-scale analysisApplied to21 Ecological Regions

9. Two-stage analysis (Howitt, 1995): Step I. Calibrating the model for each region Step II. Computing the optimal allocation of agricultural land and surface water among crops under various scenarios

10. The Programming Problem

11. Evapotranspiration’s Response to Water and SalinityPepper Letey, Dinar & Knapp (1985) Shani (2005)

12. ET w Yield w VMP w 1) Estimate (Kan, Schwabe & Knapp, 2002) 2) Calibrate a) Output equals base-year yields: b) Surface-water’s VMP equals surface-water’s price:

13. The Programming Model

14. py-pww-f(x) py-pww-f(500-x) py-pww-F py-pww-F py-pww-F Calibration for Land Allocation Pepper Palm NIS/Dunam Land (dunam)

15. The Calibrated Model

16. Data Required • Regional land allocation among crops (dunams). • Water consumption by each crop (mm/yr). • Availability of water sources (m3/year) and salinity levels (dS/m). • Soil and climate characteristics (for the simulation model). • Water prices (NIS/m3). • Output prices (NIS/ton) • Production costs (NIS/dunam, NIS/ton) All data are from official publications, for the year 2002.

17. Nationwide Average Water Applications (mm/year)

18. Treated Wastewater Irrigation Standards (Halperin)

19. Crops’ Salinity Tolerance

20. Agricultural Water Prices

21. Regional Agricultural Water Prices (NIS/m3)

22. Land and Water Use

23. צריכת מים בערבה תיכונה (מ"ק) 2007, (מקור - רשות הניקוז)

24. Part 2Application to the Arava Region

26. Some Data (CBS, 2002) Freshwater consumption = 5×106 m3/year Freshwater price = 0.63 NIS/m3 Salty-water consumption = 48×106 m3/year Salty-water price = 0.40 NIS/m3 Total cultivated land = 67,700 dunams Main crops: Pepper – 7,100 dunams Water melons & Melons – 12,500 dunams Palm – 2,200 dunams

27. No mix (basic) – Every crop is irrigated by only one predetermined type of water. Water-Mix Scenarios Field mix – Every crop can be irrigated by a specific mixture of the two water types. Regional mix – The two water sources are first blended, and the mix is used for irrigation.

28. Estimation Procedure Stage 1 - Run the model under various combinations of Freshwater and Salty- water prices, and record the associated Freshwater and Salty-water consumptions. Demand Functions Stage 2 – Estimate the demand functions:

29. Freshwater Salty Water Field Mix No Mix (Basic) Freshwater Price (NIS/m3) Salty-Water Price (NIS/m3) Freshwater (106 m3/year) Salty-Water (106 m3/year) Freshwater Price (NIS/m3) Salty-Water Price (NIS/m3) Freshwater (106 m3/year) Salty-Water (106 m3/year)

30. ps = pf ps =0.25pf ps =0.5pf wf wf wf ws ws ws The Field-level Mixing Dilemma(Kan, Schwabe and Knapp, 2002) Salinity ratio: cs =2c f

31. Regional Mix Freshwater Price (NIS/m3) Salty-Water Price (NIS/m3) Freshwater (106 m3/year) Salty-Water (106 m3/year)

32. Assumptions 1) Desalinated water is mixed with the natural freshwater. Desalination 2) Desalinated-water’s price = 2.0 NIS/m3 Options 1) Add desalinated freshwater to the region. 2) Desalinate the regional salty water.

33. Results

34. Desalinate, but Don’t blend Main Finding Allocate freshwater to salinity-sensitive crops (pepper). Allocate salty-water to salinity-tolerant crops (palm).

35. Thank you for your attention!