The findings of this study indicate that volumetric water pricing is an effective strategy for inducing water saving in irrigation also in the case of water abundant regions such as North Italy. The case study of the CEWD shows that volumetric pricing triggers an increase in water-use efficiency even with a low water price (below 0.05 EUR/m3).
Volumetric tariffs render marginal costs of water higher than zero, thereby introducing a
17 Initial energy costs of irrigation systems can be different even with flat rate tariff due to different use of pressurized water and water distribution to plants. Espinosa-Tasón et al. (2020) show important differences of energy costs for sprinkler and drip being respectively 0.21 kwh/m3 and 0.12 kwh/m3.
136
non-zero value of water resources into the cost function of the farmers, who therefore start to use the resource as a private commodity instead of a public commodity.
The overall effect of the policy is positive and this has been demonstrated by the huge reduction of water use. However, in our work, a combination of ‘metering’ and ‘small price increase’ is introduced almost simultaneously and the individual impact of each instrument cannot be easily differentiated. The transition from a zero marginal cost (common commodity) to a priced and measured input has been demonstrated to be highly effective in our case where instances of ‘over-irrigation’ in the behaviour of farmers was previously evident.
Finally, the inverse-DiD methodological proposal is a novel application of a simple and robust method that can be used to test policy innovations. The inverse DiD method relies strictly on the classic DiD application, but extends the domain of policy cases in which the application of this econometric tool can be applied. The proposed approach enables the standard DiD method to be expanded for use in environments other than those required by the original method. We hope that future applications of the inverse DiD method will demonstrate the utility of this empirical application.
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