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Abstract

Field-level economic analyses have indicated that blending fresh and saline water is suboptimal. This paper examines this issue on a regional scale, where both water sources and land are concurrently allocated to crops. We compare regional waterdistribution networks that enable salinity adjustment at the field level to networks that allow controlling water salinity on a regional scale only, such that salt concentrations cannot differ per crop. We characterize the conditions for optimal blending under regional salinity-control networks, and show that these conditions can be met in empirical studies based on production models commonly used in the literature. Empirical analysis of 16 regions in Israel revealed optimal blending in six of them. The paper analyzes the relationship of shadow values of water and land constraints to the properties of distribution networks, and relative farming profitability under exogenous and endogenous water- and land-pricing schemes.

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