Do Irrigation Water Requirements Affect Crops’ Economic Values?

Abstract

The irrigation water requirements of different crops are becoming a pivotal driver for the governance strategies of water allocation and management. This paper estimates the impact of irrigation water requirements on economic value in terms of the yields and gross saleable production of 13 different crops cultivated in the Emilia-Romagna region (Italy) over the 2010–2020 period by exploiting a generalized propensity score matching approach. Results show that the overall irrigation water requirements affect crops’ economic value. There is a causal effect of water irrigation on economic value: positive only for high levels of water irrigation in the case of yields, while it reverses and assumes a concave shape for gross saleable production. However, the effect is mediated by the irrigation water requirements of different crops. In water scarcity conditions, the allocation of water to arboreal crops, given the effect of water irrigation on gross saleable production, is also positive for small quantities of water. This paper can help guide the design of more sustainable water management strategies and agricultural development policies to face climate change.