An econometric system to assess the economic impact of water restriction policies in Spain

Abstract

The objective of the Spanish government-funded project GESMO (Gestión integral del acuífero 08.29 Mancha Oriental), is to develop new tools for the evaluation and monitoring of water policies. These tools have to be capable of matching resource exploitation with reserve sustainability, applied to aquifer 08.29 in the Eastern Mancha, Spain. A decision support system (DSS), was developed as part of the GESMO project, that integrates two different systems within one computer application. One, an hydrogeological model, simulates the River Júcar basin and its associated aquifer. The other, an econometric system, is capable of predicting the evolution of regional crop maps, crop yields and crop prices, thus allowing the determination of the regional gross product of crops. This paper describes mainly the economic system of the DSS, a set of econometric models. Those used for crop allocations are the most important for the DSS. The approach followed for the specification of the DSS is proposed as a provisional method based on information from the pre-quota period to estimate likely responses of farmers in a post-quota period. A brief description of the overall structure of the DSS and an example of one of its possible applications are also included in the paper.