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The farm sector of the Western Cape is modelled using a sector mathematical programming model to determine the effect of different water policies on output, prices, welfare and employment. Two scenarios are analysed, namely the effect of a restriction of water available for irrigation, and an increase in water tariffs. Results show a relative shift away from (intensive) irrigated production, and a decrease in producer welfare, especially for irrigation farmers, under both scenarios. When water availability is decreased, the negative effect falls disproportionately on the poor as employment decreases. In the long run the negative effects are severe, as there is a relative shift out of industries where the Western Cape has a competitive advantage.


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