Technological change in irrigated agriculture in a semiarid region of Spain

Technological change plays a decisive role in irrigated agriculture, which is particularly challenging in semiarid regions. The main objective of this paper is to assess four kinds of alternative technological improvements aimed at dealing with future water availability, especially in the case of extreme events like drought. We evaluate these technologies for a better understanding of what form should be applied in irrigated agriculture in a context of limits on natural resources. We develop a dynamic computable general equilibrium (CGE) model, whose production structure distinguishes between rainfed and irrigated crops, and between a variety of irrigated crops. Land use changes are also evaluated. As well as technological change, we consider the Water Framework Directive (EC 2000/60), which establishes water cost recovery as a key goal. Thus, we assess strategies that combine irrigation water pricing strategies and improved technology. Our results show that policy strategies that focus on fostering technical progress can mitigate the long-term economic effects of downward trends in water supplies, even in drought years. The study also confirms that the absence of price volatility achieved through a water pricing strategy could improve the sustainable use of water.