Economic Analysis of Water Commodification: A Research Report

This report investigates the economic implications of water commodification, focusing on the effectiveness of water pricing in controlling usage. It analyzes the arguments of various scholars and presents a case study of olive farmers in southern Spain. The study examines how farmers' financial conditions and irrigation practices influence their water consumption, revealing that water pricing alone may not be sufficient to manage water usage effectively. The research highlights that farmers often prioritize production and are willing to pay higher prices for water to maintain profitability. The report concludes that while water policies can partially influence water usage, factors like farmer lifestyle and affordability play a significant role. The findings emphasize the need for a holistic approach to water management that considers both economic and social aspects, including the potential environmental consequences of overuse.

Running head: COMMODIFICATION OF WATER
COMMODIFICATION OF WATER
Name of the Student
Name of the University
Author Note

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Context
The paper intends to dig into the never-ending debate of commoditization of water
can be fruitful in efficient usage or not. In this context many scholar have researched and
have opined with different ideologies and have supported their arguments with presentation
of facts, numbers and data to reveal how pricing of water is mostly ineffective in controlling
water usage. Expósito and Berbel (2017) in the article, namely; “Why is water pricing
ineffective for deficit irrigation schemes?” argues as the explanation of the figure 1 that
pricing of water can turn out to be effective if it has been arranged much above the normal
price otherwise it would seem to be insignificant. They also showed that the consumption of
water does not have the tendency to fall until the profit or the income of the farmer is affected
in a negative manner. Mutambara, Darkoh and Atlhopheng (2016) in “A comparative review
of water management sustainability challenges in smallholder irrigation schemes in Africa
and Asia” claims in the introduction very clearly with precise examples and data provided by
“Water Use Association” that pricing of water firstly depends and functions differently in
different countries and there are more effective management systems that can help in
effective use of water than water pricing.
Summarization of the findings
Expósito and Berbel (2017) have demonstrated in their research that water pricing
might significantly control the extra usage of water but there is a bigger scope of hindrance in
this statement. They have gone through different forms of experience where they finally
concluded with the idea that water being a necessary element in regular life starting from
irrigation to the usage of daily chores, its use cannot be reduced until the scarcity is literally
felt and experienced by the users. The authors came up with the information that 1.2 EUR/m3
is the expanded price of water that is more than ten times the original price for water that is

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paid by the farmers of olive in Spain. The paper excavates the concrete information about
how the usage of water does not depend completely on the water pricing. They showed that
farmers are equipped with different financial conditions which make their demand structure
look different from one another that further drives them to see for extra production.
Therefore, looking at one or two farmers it cannot be said that price hiking of water can be
instrumental in managing the usage of water. However with a standard research sample, they
came to the conclusion that water pricing is ineffective in managing water usage.
They have gone through a particular case study of olive farmers in southern Spain
where they have interviewed 99 farmers to understand their lifestyle and how water pricing
can be effective in their profit making method. It had been clearly demonstrated that 88% of
the entire consumption of water is used in irrigation and that was around 875m3 according to
the report of 2015. The growth of olive is shown to have varied from one land to the other
depending on the DI techniques used by respective farmers. The research showed that the
demand of water is equivalent to the water’s marginal product value (MPV) and has been
presented by MPV = P'y · dY/dW = P'y · (b1 + 2·c1W). The research aimed to show by
collecting information from the farmers that how important irrigation is because that occupies
most of the surface of the farming land of the southern Spain. Individual farmers work with
their own strategy where they invest their money until it is not exhausted completely because
they know that irrigation is the source of their constant profit. If the profit becomes
overpowering then it does not worry pr affect the farmers even if the price of the water
reaches near the threshold point. It has been observed that with the usage of high technology
in olive farming the farmers collectively pay an average cost of 0.11 EUR/m3 each year and
succeeding this price to an unattainable extent can only affect them from using the water in
irrigation.

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The authors have come to this conclusion that going beyond the threshold price seems
to be unfeasible and disproportionate from a sociological perspective. The DI technique that
helps usually all the olive farmers help in allocating the water in an optimum way however,
this does not imply that pricing the water can affect them. Until the price is reached at a level
where they cannot afford it anymore, they continue to buy it and invest it in something that
assists them to get back the money. The research that was conducted within 99 farmers
occupies almost the 505 of the total farmers present in the specific land. However, it has also
been expressed that this vigorous and overuse of water can and will affect the environment
that is irreversible but it has also been proved that till the time it cannot be shown to the
irrigators that they will not get water one day if the water is not used wisely, they will
continue to behave in the same way while water pricing will not affect their lifestyle for that
matter.
Evaluation
The evidences that have been presented in the article show how well researched and
well developed the entire paper is with respect to the topic that is being discussed. Water
commoditization means imposing a price on water gives the impression to the readers that it
might help in managing the usage of water but their research have been successfully drawn
the idea that it not only depends on the pricing but also depends on the lifestyle and
affordability of the people using the water. Since the paper showed that the olive farmers are
in a state to continue their farming, they are ready to pay any amount to continue their
production to reach the profit. The figures and the charts are authentic because they represent
the original result of the survey. Therefore, it can be concluded that usage of water can be
partially controlled by the water policy but it cannot be done entirely with the same.

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References
Expósito, A. and Berbel, J., 2017. Why is water pricing ineffective for deficit irrigation
schemes? A case study in southern Spain. Water resources management, 31(3), pp.1047-
1059.
Mutambara, S., Darkoh, M.B. and Atlhopheng, J.R., 2016. A comparative review of water
management sustainability challenges in smallholder irrigation schemes in Africa and
Asia. Agricultural Water Management, 171, pp.63-72.