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Authors requiring further information regarding Elsevier’s archiving and manuscript policies are encouraged to visit: http://www.elsevier.com/copyright Author's personal copy Journal of Hydrology 464–465 (2012) 216–232 Contents lists available at SciVerse ScienceDirect Journal of Hydrology journal homepage: www.elsevier.com/locate/jhydrol Incentives to adopt irrigation water saving measures for wetlands preservation: An integrated basin scale analysis ⇑ Alireza Nikouei a, , Mansour Zibaei a, Frank A. Ward b a Department of Agricultural Economics, Agricultural Faculty, Shiraz University, Shiraz, Iran b Department of Agricultural Economics and Agricultural Business, New Mexico State University, Las Cruces, NM 88003, USA article info summary Article history: Preserving natural wetlands is a growing challenge as the world faces increased demand for water. Received 23 July 2011 Drought, climate change and growing demands by users aggravate the issue. The conflict between irri- Received in revised form 5 July 2012 gated agriculture and wetland services presents a classic case of competition. This paper examines an Accepted 8 July 2012 institutional mechanism that offers an incentive to farmers to adopt water conservation measures, which Available online 20 July 2012 in turn could reduce overall water use in irrigated agriculture within a selected basin. Reduced water This manuscript was handled by Geoff Syme, Editor-in-Chief, with the assistance of demands could provide the additional water needed for wetland preservation. We present an analytical Muhammad Ejaz Qureshi, Associate Editor empirical model implemented through the development of an integrated basin framework, in which least-cost measures for securing environmental flows to sustain wetlands are examined for the Zayan- Keywords: deh-Rud River Basin of central Iran. To test this idea, two policies – one with and one without an incentive Wetland – are analyzed: (a) reduced agricultural diversions without a water conservation subsidy, and (b) reduced Water conservation agricultural diversions with a water conservation subsidy. The policies are evaluated against a back- River basin ground of two alternative water supply scenarios over a 10-year period. Results reveal that a water con- Integrated water management servation subsidy can provide incentives for farmers to shift out of flood irrigation and bring more land Climate into production by adopting water-saving irrigation technologies. The policy increases crop yields, raises Drought profitability of farming, and increases the shadow price of water. Although the conservation subsidy pol- icy incurs a financial cost to the taxpayer, it could be politically and economically attractive for both irri- gators and environmental stakeholders. Results open the door for further examination of policy measures to preserve wetlands. Ó 2012 Elsevier B.V. All rights reserved. 1. Introduction Wetlands preservation faces growing challenges in an era of in- creased scarcity as a result of drought, climate change or increased Wetlands are an important environmental resource in many water uses by competitors in river basins (UN, 2009). Wetlands parts of the world (Smardon, 2009). Their open-access nature represent an interface between the catchment area and the aquatic and public-good characteristics often cause them to be underval- environment (Hattermann et al., 2006). Dams, diversions and river ued in decisions relating to their use and conservation (Akter management reduce flooding to wetlands, altering their ecology, et al., 2009). Wetlands provide a wide and diverse range of and contributing to poor health of aquatic biota (Kingsford, environmental services including habitat for endangered species, 2000). Conflict between irrigated agriculture and wetland services flood protection, water purification, amenities and recreational are a classic case of competition for scarce water (Allan, 2003) opportunities (Woodward and Wui, 2001). These services typically especially in developing dry countries where irrigation can account have a low to zero market price (Brouwer et al., 1999), and in some for 90% or more of water withdrawals (Kijne et al., 2003). Despite cases may provide services for which resource users have a greater the importance of wetlands, agriculture is the strategic water- willingness to pay than the opportunity cost of the same water if using sector that supports food security planning in many coun- used for agricultural production (De Laporte, 2007; Smardon, tries (FAO, 2006). That is particularly important in light of rapidly 2009); This characteristic of wetlands gives rise to undervalued rising non-agricultural water uses and periodic droughts linked to losses in wetland area when policy decisions promote irrigation climate variability and climate change (IPCC, 2007; Kijne et al., uses (De Laporte, 2007; Mallawaarachchi et al., 2001). 2003; OECD, 2006). The future of water allocated for the protection and security of wetlands depend on economic, social, and political development trends and the results of litigation, legislative, and ⇑ Corresponding author. Tel.: +98 913 116 2826; fax: +98 311 626 8324. E-mail addresses: [email protected] (A. Nikouei), [email protected] (M. administrative debates (Smardon, 2009). Policy makers need Zibaei), [email protected] (F.A. Ward). economic evaluation measures to make decisions on preservation 0022-1694/$ - see front matter Ó 2012 Elsevier B.V. All rights reserved. http://dx.doi.org/10.1016/j.jhydrol.2012.07.013 Author's personal copy A. Nikouei et al. / Journal of Hydrology 464–465 (2012) 216–232 217 of wetlands versus the demands for water by irrigated agriculture between consumptive and environmental water uses (Fig. 1). The (Qureshi et al., 2010a; Ringler and Cai, 2006). basin has an area just over 42,000 square kilometers, with 57% in An improved understanding of the interaction between river flat lands containing a wide range of water uses and the other diversions for agriculture, floodplain ecology, and investigations 43% in more mountainous landscapes. The ZRB has an average into ecological impacts of management practices is essential to rainfall of 130 mm and a monthly average temperature ranging avoid further loss of wetlands (Kingsford, 2000). Integrating ripar- from 3 °Cto29°C(IWMI, 2009). The Zayandeh-Rud (ZR) is the ian water uses and wetlands’ needs into eco-hydrological river basin ZRB’s main river, rises in the Zagros Mountains and flows 400 km processes is a state-of-the arts management approach to support eastward before ending in the Gavkhouni swamp (wetland), a ecosystem functions related to flood events while producing eco- seasonal salt lake southeast of the city of Esfahan. There are several nomic benefits for the local population (Hattermann et al., 2006; recreation and environmental sites on the reservoirs and along the Nakamura, 2003; O’Neill et al., 1997; Ringler and Cai, 2006). Recent river banks that are important tourist destinations. The ZR studies show that more widespread use of a river basin scale analy- passes through the desert city of Esfahan, a major cultural and sis would considerably enhance the effectiveness of water resource economic center of Iran with a population of about 1.6 million management initiatives. Examples are found, for instance, in Aus- (Statistical Center of Iran, 2009). For centuries Esfahan has been tralia (Mainuddin et al., 2007; Qureshi et al., 2010b), USA (Brinegar an oasis settlement, noted for its surrounding fertile lands and and Ward, 2009), Turkey (Gürlük and Ward, 2009), South Africa prosperity. (Jonker, 2007), Brazil (Maneta et al., 2009), France (Lanini et al., Until the 1960s industrial demand for water was minimal 2004), Spain (Pulido-Velazquez et al., 2008), Botswana (Swatuk because of weak industrial development in the ZRB, which enabled and Motsholapheko, 2008), and Egypt (Gohar and Ward, 2010). the basin’s available water to be used mostly for irrigated agricul- Despite these contributions described above, few studies have ture. The Chadegan Reservoir dam project in 1972 was a major examined policy options available for resolving the competition hydroelectric project built to stabilize and sustain downstream for water between agriculture and other water using sectors while water demands and to generate power. Since 1972, that reservoir focusing special attention on requirements for and water needs for has helped prevent seasonal flooding of the ZR River that would wetlands water supply. The objective of this paper is to examine have otherwise occurred. An estimated 80% of the ZR’s diverted alternative policy approaches to promote farmers’ adoption of water is used for irrigated agriculture, with 10% for urban house- water conservation measures that would make saved water avail- hold use, 7% for industry. Industrial use includes the Zobahan-e- able for wetlands ecological functions under conditions of climate Esfahan and Foolad Mobarekeh steel companies and Esfahan’s