Water pricing for multi-sectoral allocation: A case study

This paper presents a case study for the allocation pattern of available water resources within and among competing sectors that would achieve the highest economic return from water use. For this purpose, an optimization model using linear programming was developed. Considering constraints on greenhouse area, crop production and seasonal per capita water requirements along with the area-specific conditions and potential growth, the optimal water allocation pattern between the prevailing and future consuming sectors was determined. The results indicated that, at present, water resources are misallocated as well as under-priced; current municipal and agricultural water prices represent 61% and 69%, respectively, of the actual water cost. With the development of tourism in the area, the agricultural sector is expected to diminish as more profitable uses of water evolve.