Environmental and social ideal price establishment for the irrigation water by means of the internalisation of the environmental costs and the use of social accounting matrix. Application to Navarre

Abstract

This work develops a methodology to obtain a “social ad environmental optimal price” for water in the Comunidad Foral de Navarra (CFN) in order to maximize the internalization of the water environmental cost generated by agricultural consumption without affecting the general level of the regional economy. The economical model is built over a Geographical Information System (GIS) that allows quantifying and valuing in economical terms environmental water costs in different basins. Elements that have been considered to describe the water resource value are volume, quality and hazard to affect aquatic and bank ecosystems. Values have been estimated with Environmental Economy methods. A demand curve for water is also built and a Social Accounting Matrix (SAM) is used to watch if regional economy supports a price that internalizes total water value. Potential water prices are established ranging from prices that minimize negative economic regional impacts –social optimal priceto those that internalize totally the environmental costs of water- environmetnal optimal price.