Abstract
This paper studies the impact of lobbying on policies in a centrally managed water economy. First, we develop an optimal control model in which long-run water-management policies are an outcome of negotiation between policymakers and a politically organized farming sector. We show that under equilibrium conditions in the political game, larger political power of the farmers' lobby leads to faster exhaustion of naturally replenished water resources, and expedites the investment in water-supply backstop technologies such as desalination. Then, we employ a detailed hydro-economic model of Israel's water economy to assess the validity of claims by scientists and bureaucrats that lobbying by the local agricultural sector has contributed to the depletion of the country's natural freshwater resources and thus accelerated the development of seawater desalination. Specifically, we compare observed trajectories of water-management policies in the years 2000–2020 to their simulated counterparts, and find a better fit for simulated scenarios that involve lobbying than for a socially optimal one; this result prevails under simulated conditions of extreme water shortage due to faster population growth or lower recharge of natural water sources. The best-fitted political-equilibrium scenarios indicate considerable deadweight loss. We discuss potential causes of over- and undervaluation of the lobbying effect.
| Original language | American English |
|---|---|
| Article number | 107320 |
| Journal | Ecological Economics |
| Volume | 193 |
| DOIs | |
| State | Published - Mar 2022 |
Bibliographical note
Funding Information:This study was financed by the Center for Agricultural Economics Research at the Hebrew University of Jerusalem , Isreal.
Funding Information:
An additional indication of possible successful lobbying efforts are region-specific irrigation-water policies. Until the mid-2000s, the Water Commission had followed what is known as the ?walking on the edge? policy, which heavily exploited Israel's natural water resources, to postpone entrance into the desalination era (Schwartz, 2010). As indicated by Feitelson (2005), this policy resulted from an unresolved political dispute: the Ministry of Finance demanded the abolishment of agriculture-water subsidies as a condition for funding seawater-desalination projects, whereas the agricultural lobby blocked any attempt in parliament to increase irrigation-water prices, forcing the water commissioner to lower the water levels in the reservoirs below predetermined ?red lines.? At the same time, however, extremely low fees were set for the extraction of water by irrigation associations in the north (Kislev, 2011), and extra water quotas were allotted to farmers in the south.15 The accelerated depletion of aquifers, the Sea of Galilee and the artificial surface-freshwater reservoirs led to a severe water crisis in the early 2000s (Kislev, 2008), eventually yielding a new water-management strategy, in which supply relies heavily on large-scale seawater desalination (Becker et al., 2010; Schwartz, 2010; Feitelson, 2013). Since the launch of the first plant in 2005, desalination capacity has increased steadily, reaching a total cumulative capacity of 605 million m3 per year in 2020, and constituting about 40% of the total freshwater supply, and 85% of the total household consumption (Israel Water Authority, 2020).This study was financed by the Center for Agricultural Economics Research at the Hebrew University of Jerusalem, Isreal.
Publisher Copyright:
© 2021
Keywords
- Desalination
- Economics
- Irrigation
- Lobbying
- Model
- Water management
