Theshadowpriceofnon-renewablegroundwaterMarcF.P.Bierkens,StijnReinhard,JensdeBruijn,YoshihideWada
Manyofthemajoraquifersintheworldexperiencegroundwaterover-exploitationleadingtothedepletionofgroundwaterresources.TheFigureshowsthegroundwaterfootprint:howmuchareaisneededtosustaincurrentgroundwaterwithdrawalcomparedtotheaquiferarea(Wadaetal.,2010;Gleesonetal.,2012).
Background Introduction
Methods
Knowledgeabouttheactualvalueofwaterasaresourceislimited(Ziolkowska,2015).Thevalueof(ground)waterforirrigationisrepresentedasthecostsofextractingwaterfromaquifersanddeliveringittothefinalconsumer.Thisvaluedoesnotreflectthevalueofwaterasadepletable (non-renewable)resource.Waterforirrigatingcropsmaybeunder-priced,whichcanleadtoirreversibledepletion. Theactualvalueofwaterforirrigationcanberepresentedbytheshadowpriceofwater.Thehighertheshadowpricethesmallerwillbethegapwiththeunknownvalueofwaterasanon-renewableresource.
• Shadowprice:definedasbeingequaltothebenefitsproducedbythelastm3 ofnon-renewablegroundwater
• 12countrieswithlargestgroundwaterdepletion;5crops• Foreachcrop,eachcountryandeachyear:
1. Yield,areairrigatedandprize(FAOstatistics)2. Actualevapotranspirationwithoutirrigation(Greenwater)3. Surfacewaterandrenewablegroundwaterconsumption(Bluewater)4. Non-renewablegroundwateruse(NRGwater)
• 2,3and4:GlobalhydrologicalmodelPCR-GLOBWB(Wadaetal.,2012)
Methods• Econometricanalysis:fittingpaneldatapercrop(country,yield,year)• FittingtheCobb-Douglasfunctionalformoftheproductionfunction:
• Theshadowpriceofthecurrentyeart:
𝑌 = 𝛽$ % 𝐴'( % 𝐺𝑊'+ % 𝐵𝑊'- % 𝐼𝑊'/ % 𝐶𝐹'2 % 𝑡'4 % 𝑒
Results:yieldsandshadowprices Results:shadowpricepercrop/country
Predictedyield(Eq.1)versusreportedyield(FAO)ofwheat(left)andrice(right)forfivecountries
(1)
(2)
Timeseriesofestimatedshadowpricesfor5countriesand5cropsovertheperiod1991-2010.
Estimatedaverageshadowpricesfortheperiod1990-2010($/m3):
Results:re-allocatingNRGW
ReferencesGleeson,T.,Wada,Y.,Bierkens,M.F.P.&vanBeek,L.P.H(2012).Waterbalanceofglobalaquifersrevealedby
groundwaterfootprint.Nature 488:197-200.Wada,Y.,vanBeek,L.P.H.,vanKempen,C.M.,Reckman,J.W.,Vasak,S.&Bierkens,M.F.P.(2010).Globaldepletionof
groundwaterresources.Geophysicalresearchletters37(20).Wada,Y.,Wisser,D.&Bierkens,M.F.P.(2014).Globalmodelingofwithdrawal,allocationandconsumptiveuseof
surfacewaterandgroundwaterresources.EarthSystemDynamics 15:3785–3808.Ziolkowska,J.R.(2015).Isdesalinationaffordable?—regionalcostandpriceanalysis.WaterResourcesManagement
29:1385-1397.
EGU2018-6242
𝑆𝑃8,: = 𝑝8,: 𝜕𝑌
𝜕𝑁𝑅𝐺𝑊= 𝑝8,:. 𝛽4
𝑌𝑁𝑅𝐺𝑊
Country Wheat Potato Maize Rice CitrusChina 0.058 0.073 0.179 0.105 0.160Egypt 0.060 0.048 0.575 0.043 0.095India 0.023 0.022 0.033 0.054 -1
Iran 0.066 0.048 0.194 0.027 0.090Italy 0.065 0.075 0.138 0.017 0.368
Mexico 0.018 0.116 0.040 0.004 0.066Pakistan 0.013 0.006 0.023 0.0032 0.043
SouthAfrica 0.032 0.082 0.048 0.000 0.193Spain 0.044 0.089 0.158 0.009 0.317Turkey 0.049 0.039 0.089 0.002 0.732
UnitedStates 0.046 0.044 0.136 0.008 0.056Average 0.043 0.058 0.147 0.025 0.212
1. Noestimateduetolackofyieldandorpricedata2. Estimatesbasedon1991-2002duetolackofyieldorpricedatainlateryears
Wehaveshownthattheshadowpricefornon-renewableorfossilgroundwatercanbedeterminedfromtheeconometricanalysisofhistoricalyieldandpricedatasupplementedwithsimulationsofcrop-waterusefromaglobalhydrologicalmodel.Ourresultsshowthatshadowpricespercropandpercountryvarysignificantly.Thisprovidesopportunitiesforchangingthecropmixwithinandbetweencountriesinordertolimitgroundwaterdepletionortogeneratemorerevenuefromnon-renewablegroundwateruse.
Conclusions
Country Fromcrop1 Tocrop2China Potato Maize 681 139Egypt Rice Maize 5 62India Maize Wheat 50 761Iran Wheat Potato 1798 2827Italy Rice Potato 4 41Mexico Rice Potato 14 167Pakistan Rice Wheat 47 3358SouthAfrica Rice Potato 3·10-2 3·10-2
Spain Rice Potato 1 3Turkey Rice Potato 1 4UnitedStates Wheat Potato 413 459
Maximalincreaseinrevenue(M$year-1) and maximum reduction in non-renewable groundwaterconsumption(MCMyear-1) when re-allocating non-renewablegroundwaterconsumptionbetweencrops
050100150200250
Green Blue NRGWConsum
ptiveusekm
3
USA
0
100
200
300
Green Blue NRGWConsum
ptiveusekm
3
China
0
5
10
15
20
Green Blue NRGWConsum
ptiveusekm
3
Eqypt
0
100
200
300
400
Green Blue NRGWConsum
ptiveusekm
3
India
0
10
20
30
40
Green Blue NRGWConsum
ptiveusekm
3
Iran
0
5
10
15
20
Green Blue NRGWConsum
ptiveusekm
3
Italy
0
10
20
30
40
Green Blue NRGWConsum
ptiveusekm
3
Mexico
01020304050
Green Blue NRGWConsum
ptiveusekm
3
Pakistan
0
5
10
15
Green Blue NRGWConsum
ptiveusekm
3
SaudiArabia
0
5
10
15
20
Green Blue NRGWConsum
ptiveusekm
3
SouthAfrica
0
10
20
30
Green Blue NRGWConsum
ptiveusekm
3
Spain
0510152025
Green Blue NRGWConsum
ptiveusekm
3
Turkey
Consumptiveuseperwatertypein12majorgroundwaterdepletingcountries
Wheat Rice
Wheat Rice
Y: Yield(kg/ha)A: Areaunderirrigation(ha)GW: Greenwater(actualevaporation;m3/ha)IW: Irrigationwater=blue water (renewable irrigation water)
plusnon-renewablegroundwater(NRGW;m3/ha)CF: Countryspecificfactortoaccountfordifferences
inproductivity(-)t: Time(trendsincroppingtechnology)(years)pc,t: Country-specificpriceforcrop($/kg)
