Water Demand Management versus Water Supply Policy:

the Ebro River Water Transfer

Jos Albiac-Murillo, Javier Tapia-Barcones, Anika Meyer and Javier Uche
Unidad de Economa Agraria, SIA-DGA, P.O.Box 727, 50080 Zaragoza. Spain.

Summary
The study on the Ebro inter-basin transfer investigates the management of water
demand as an alternative to the water supply policy proposed by the Spanish National
Hydrological Plan (NHP) and approved by the Spanish Parliament, to divert from the Ebro
River 1.100 hm3 up to a distance of 850 km. The analysis of agricultural water demand for the
counties encompassing the Mediterranean Levante (provinces of Castelln, Valencia, Alicante,
Murcia and Almera) shows that a demand management policy with more elevated prices than
those currently in place solves the water scarcity, without need for external transfers which
would deteriorate the ecological functionality of the Ebro source basin and prolong the current
unsustainability of the Jcar, Segura and Sur receiving basins.
The effects on the agricultural sector of alternative solutions to water scarcity, have been
examined by two demand management scenarios. In the first scenario, a strategy is analyzed in
which aquifer overexploitation is prohibited, and there are no transfers of water from other
basins. In the second scenario, a price raise is considered in order to calculate the price of
water that balances the global water demand placed on the basins of Levante with the available
water resources of those basins.
The impact on the agricultural sector of increases up to 0.18 /m3 in the price of water,
is small on the final agricultural production (-6%), although the impact is more significant on
farmers net income with a loss of 30 percent. The reduction in agricultural water demand
substitutes for the water transfer allocations from the Ebro River assigned by the NHP for
agricultural and environmental uses, and more than half of its allocation towards industrial and
urban use. The remainder of the industrial and urban allocation can be covered by
desalinization and improvements in irrigation efficiency.
The viability of diverting water from the Ebro as proposed by the NHP has been
examined simulating the cost of diverted water, with prices ranging from 0.19 /m3 in the
Northern counties to 0.75 /m3 in Southern counties. This simulation defines the available
demand for transferred water that can be absorbed by the Levante counties at the high prices
of diverted water or effective demand. Results show that the allocation that the NHP assigns to
agricultural and environmental uses in the Segura basin greatly surpasses the effective demand of
water at this price, which farmers from the Segura basin will not be able to pay. Therefore
farmers will continue aquifer overexploitation.
Key words: water demand management, water scarcity, water transfers.

World Bank Water Forum 2002

May 6 8, Washington, D.C.

2
Introduction
The economic and environmental analysis of water issues in Spain is an important
research question. Spain is a relatively large country in the European Union (EU), with a land
surface of 505,958 km2 and an average precipitation around 340,000 hm3 per year (684 mm),
but with substantial spatial and temporal rainfall variation. Water demand for consumptive
uses reaches almost 30,400 hm3, divided between 24,100 hm3 for agricultural uses and 6,300
hm3 for urban and industrial consumption (MIMAM 2000a). New urban and industrial
demands and the emergence of environmental concerns related to water provision and usage
are creating pressures to introduce new water management policies. In the present scenario of
water scarcity, the assignment of water among competing uses has created strong conflicts
among user groups and regional governments, compounded by emergency situations during
drought years. The water scarcity is specially acute in the Southeastern watersheds, triggering
the over-exploitation of aquifers, and currently large investments are proposed by the National
Hydrologic Plan to transfer water resources from the Ebro basin to the Levante basins.
Large parts of the country are classified as arid or semiarid, and irrigation becomes
important for agricultural production. Because of the large and increasing water irrigation
demand, water management issues in Spain revolve around the agricultural use of water, which
accounts for 80 per cent of total demand. Irrigated area in Spain reaches 3.53 million ha,
distributed between 2.16 million ha of arable crops and 0.81 millions of tree crops. By crops,
cereals fill 821,000 ha generating an income of 751 million ,1 industrial crops fill 559,000 ha
with 625 million of income, vegetables area is 352,000 ha generating an income of 3,450
million , while citric and non-citric fruit trees fill 503,000 ha and generate 2,278 million .
Both cereals and industrial crops have a lower income per hectare than fruits and vegetables.
The average income per cubic meter of water in agriculture is low, reaching 0.13 /m3
for cereals, 1.64 /m3 for vegetables, and 0.84 /m3 for fruit trees. The average income of
water is much higher in the industrial sectors with a sizable water demand, reaching 84.3 /m3
in the agro-food industry, 83.1 /m3 in the chemical industry, and 71.7 /m3 in the paper and
edition industry. The average income of these industries are between 50 and 100 times large
than the more profitable agricultural sectors such vegetables and fruit trees. Water profitability
in agriculture is very low compared not only with industrial sectors, but also with the services
sector and with the environmental services of water.2
The more profitable crops, fruits and vegetables, are located mainly in the Mediterranean
Levante regions, and a huge expansion of irrigated acreage has taken place in the Segura
(Murcia) and South (Almera) basins in the last decades,3 creating an important environmental
1

1 Euro () = 0.89 US dollars.

The services sector is supplied by the urban water networks, paying an average price of 0.70 /m 3, while the
average water price in agriculture is much lower, 0.02 /m 3 (INE 1999). There are no systematic economic
valuation studies on the environmental services of water, but their value could be high.
3 Quintanilla et al. (1997) indicate that the irrigation acreage in the Segura basin was 80,000 ha in 1975 and
164,000 ha in 1991, compared with 266,000 ha at present.
2

3
problem of aquifer overexploitation. To solve this problem, the central government has
chosen to transfer water from the Ebro basin, an investment above 6 billion to be financed
with national and European Union funds (Figure 1).
Some alternative water management policy proposals call for demand management
measures, such augmenting water prices to recover full costs, the introduction of water
markets, or the revision of water rights. Many authors indicate that water demand management
measures are preferable to the traditional policies to expand water supply that should be
abandoned. The demand management measures are more desirable from a perspective
focusing on sustainability of water resources and environmental protection. The appropriate
design of irrigation water management measures, is a key question not only to reduce the
environmental problems created by the overuse of water resources, but also to control
pollution from irrigation.
Measures to reduce environmental damages have been introduced in the last years, and
regulations on water management and quality control have been established in several EU
directives. The directives concerning agricultural activities are the Nitrates Directive (1991) and
the Water Framework Directive (2000). In Spain, implementation of legislation to protect
water resources has advanced drastically the treatment of urban and industrial residual water,
but the Nitrates Directive has been implemented with long delays. The Nitrates Directive deals
only with subsurface water, and state (regional) governments have established too late and
after penalties warning the Vulnerable Areas, the Code of Good Practices, the Action
Programs and the Required Compliance Measures. The implemented policies have been
designed to reduce for the most part the number and size of vulnerable areas, as well as to
minimize the requirements on farmer polluting practices.
The new Water Framework Directive expands aquifer protection over all waters, and
defines a mandatory compliance objective to reach good condition of water. The Directive
promotes water prices at full recovery costs, that include environmental costs and induce
conservation. Management of water irrigation in Spain is going to acquire a key role as a
consequence of this Directive, which establishes: i) emission restrictions and quality standards,
with deadlines to achieve an appropriate quality; ii) management of water based on watersheds
and user participation; iii) the water price charged to users should be equal to full costs of
capture, distribution and treatment. Exceptions could be considered for not applying these full
costs, but all the agricultural water use demand in Spain could not be considered special case,
because it represents 80 per cent of total water consumption in the country.
The National Hydrologic Plan approved by the Spanish Parliament in 2001, is going to
be the fundamental norm shaping the framework for water management and water quality in
Spain. In the agricultural sector, the Plan introduces measures to modernize irrigation, and
large water transfers to the Levante regions in order to solve the critical problem of overuse
and scarcity of water resources (MIMAM 2000b). There are no rules in the Plan to drive
agricultural water prices towards full recovery cost prices, although farmers in the Levante
regions are supposed to pay much higher prices than current water prices for transferred water

4
Figura 1. Map of the Water Transfer Channel System

5
from external basins. The analysis that follows makes a contribution to the knowledge
about the consequences of implementation of the water transfer proposed by the National
Hydrologic Plan, and presents and alternative to solve water scarcity by water demand
management measures.
Sustainability of the National Hydrological Plan
The concept of sustainability is linked to the increase of human well being with respect
to time, and is based on the idea of non-diminution of various kinds of capital: capital created
by man, natural capital and human and social capital. In weak sustainability, the different types
of capital can be substituted among themselves, but in strong sustainability some types of
capital can not be substituted (Pearce 2000). Sustainability applied to hydrologic resources
implies the protection of the natural capital formed by the water systems that maintain the
ecological functioning of basins. The Ebro and Levante basins have experienced a serious
degradation in ecological functioning during the second half of the twentieth century. Today,
the key problem in the Ebro and Levante basins is stopping the degradation of natural capital
and restoring the functionalities of the hydrologic systems, to which end the NHP must
guarantee actions that do not provoke more degradation, and what is more, insure the
improvement of the functional integrity of those systems.
The NHP proposes to transfer water from the Ebro basin to Levante basins, and the
essential question is to identify the elements of natural capital that this transfer deteriorates,
and if there exist preferable alternatives from the economic and environmental points of view.
The critical elements that can be identified in the Ebro basin are the decreasing water volume
in the Ebro Valley in recent decades due to increased water consumption, and the progressive
degradation of water quality. This degradation is a consequence of point source urban and
industrial pollution, non-point source pollution from agricultural activities, and the scarcity of
water volume in certain sections of the river. Another negative consequence comes out of the
fact that the transfer would require increased regulation by new dams to meet the pluriannual
periods of drought, which would mean a greater degradation in the ecological functioning of
the basin. Finally, the transfer of water would further deteriorate the Ebro Delta due to the
reduction in water volume causing a more aggressive penetration of saline water, and
additional lack of sediments deposition (Prat and Ibaez 2001).
The EU has passed the Water Framework Directive which adopts a new focus on water
policy based on the management of demand, full recovery costs including environmental costs,
and the establishment of standards on water flow and contaminants. The Directive promotes
the use of economic tools as opposed to an increase in the availability of water resources in
order to avoid waste and reduce environmental degradation. The demand management
alternative proposed in this study follows the criterion of the Water Framework Directive. A
moderate increase in water prices of some 0.12 or 0.18 /m3 in the Levante basins, rebalances
supply and demand avoiding external transfers. At present, the price of water is 0.03 /m3 in

6
almost all of the Jcar counties and in some of the Segura counties, and the price only reaches
0.15 /m3 in some counties of the Almera province where scarcity is severe. These low prices
foster wastefulness in a market in which the resource is rationed and has a quota assigned by
the water administration. Agricultural water prices could be maintained below prices paid by
other users, but scarcity in Levante has to be resolved with prices higher than 0.12 /m3, which
will reduce but not eliminate moderately profitable agricultural activities such as cereals (Albiac
et al. 1998, Feijo et al. 2000, Berbel et al. 1999, Sumpsi et al. 1998). This will free up sufficient
demand so as to solve the scarcity, with a negative effect on farmers rent that may be
compensated. This policy of demand management is studied here, and is economically and
environmentally preferable to the supply policy of water transfers from the Ebro.
The model
To analyze water demand management and the water supply policy proposed by the
Hydrological Plan, a linear programming model has been used. The main advantage of linear
programming is that a large amount of technical and economic information can be introduced
in the model at the desired level of aggregation. In the optimization problem covering the
Levante regions in the water receiving basins, the objective function maximizes the net income
of irrigated cultivation activities. The decision unit is the county, and there are 22 counties in
the Comunidad Valenciana (Castelln, Valencia and Alicante provinces), 6 counties in the
Comunidad de Murcia (Murcia province), and 7 counties in Almera (Almera province).
The constraints represent resource availability referring to irrigation acreage by type of
crop, irrigation water by month, and labor by month. The cultivation activities considered are
those that are important in the area: fruits, vegetables and cereals. The irrigated surface covered
is 94 percent in the Comunidad Valenciana, 80 percent in the Comunidad de Murcia, and 86
percent in Almera. Cost data come from official publications and monographic studies, and
are classified in direct costs, machinery, labor, indirect costs and amortizations (MAPA 1999).
Net margin (net income) of each crop is equal to subtracting from gross income the direct
costs, the machinery costs, the indirect costs and amortizations. Net margins vary for different
areas because yields change and costs are adjusted accordingly. Other coefficients are
calculated from official statistical sources, such municipal crop acreages or yield data, or they
have been elaborated from different sources as in the case of water availability by county,
where meteorological data from the Instituto Nacional de Meteorologa have been used,
together with technical data from Agricultural Research Institutes from the Valencia, Murcia
and Andaluca regions.4
The crops covered are orange, mandarin, lemon, peach, apricot and almond trees, wine
vineyards and table grape vineyards, table olive trees, lettuce, tomato, artichoke, melon, pepper,
onion, watermelon, bean, pumpkin, cucumber, broccoli, potato, wheat, barley, corn, rice,
4

Details on the model can be found in Albiac and Tapia (2001).

7
alfalfa, and sunflower. Tomato, pepper, melon, bean, and watermelon crops can be cultivated
protected (hot house) or not protected. Soils are classified as soils linked to vegetable crops, to
fruit crops, and to cereals. Substitution among vegetables is permitted in the vegetables
surface, and substitution among cereals is permitted in the cereals surface, but the surface of
fruit trees is maintained for each specie.
There are three groups of constraints: soil, water and labor constraints. To set the soil
constraints, information is available on crop acreage in the last years in each municipality by
irrigation system. One soil constraint (surface irrigation) defines soil availability for cereals; two
soil constraints (surface and drip irrigation) for non-protected vegetables and one (drip) for
protected vegetables. There are two soil constraints (surface and drip irrigation) for each fruit
specie. The water constraints are important because of the water scarcity in the regions studied.
There are twelve water consumption constraints corresponding to the monthly water needs of
crops in each county and irrigation system. The calculation of water availability in each county
is obtained from gross water requirements of crops (or irrigation water in plots). Water
availability in each county is calculated from gross water requirement of crops for the year of
reference 1998. Multiplying the water consumption of one hectare by the surface filled by the
crop in the county, water consumption of this crop is obtained. The gross water requirement
of a crop is equal to the net water requirement divided by the irrigation system efficiency (0.6
surface irrigation and 0.9 drip irrigation). The net water requirement is equal to the crop
evapotranspiration less precipitation, and the crop evaportranspiration is calculated multiplying
the reference evapotranspiration by the crop coefficients Kc. The reference evapotranspiration
is obtained from the county meteorological data, following the procedure of Martnez-Cob et
al. (1998).5
The labor constraints incorporate in the model the requirements of this resource, which
is different for each crop. Labor needs are calculated from the costs information that includes
details on monthly labor required for crops following the common practices in each area.
A linear program has been built for each county covering 35 counties where irrigation is
important, from the total of 48 counties in the Valencia, Murcia and Almera regions (Figure
2). The linear program for each county includes around 80 crop activities and 60 constraints,
from which 22 are soil constraints, 12 are water constraints and 12 are labor constraints.
Elimination of the Overexploitation of Aquifers
The elimination of the overexploitation of aquifers reduces the availability of water for
agriculture, and the effects are concentrated in the counties where aquifers are located. In the
Jcar and Segura basins the reduction of available water and cultivated acreage especially
affects the less profitable crops. But in the South basin, the reduction of water and cultivated

The procedure applies the method FAO Hargreaves (Allen et al. 1998).

8
acreage affects very profitable crops, since in the counties of the South basin there is no
possibility for abandoning crops of low profitability. Losses are quite elevated in the South and
less in Segura and Jcar; in the South the income and net profit of farmers falls one half, in
Segura it falls 20 percent and in Jcar less than 5 percent. The consequences of this scenario
show that nearly 70 percent of the losses of net profit, thats 204 million of 306 in losses,
occur in Almera (South basin) due to the abandonment of high-profit green house crops.
The counties that have the greatest losses in Almera are those which have very
profitable crops, and in Segura those which bear the greatest reduction of available water:
Campo Dalias, Bajo Almanzora and Campo Njar-Bajo Andarax in Almera, and Valle del
Guadalentn and Nordeste in Murcia. In Campo Dalias income and net profit fall 378 and 180
million , and in Valle del Guadalentn they fall 103 and 44 million , respectively.
If the measure of demand management chosen to solve the scarcity in Levante is that of
prohibiting overexploitation of aquifers without external transfers, then mechanisms should be
established to transfer water between counties in the interior of the South, Segura and Jcar
basins, such that farmer losses are minimized. In the South Confederation these management
measures should permit the reassignment of water from western counties to the eastern basin,
or from counties of neighboring basins. The quantity of water from the transfer envisaged by
NHP to solve aquifer overexploitation and guarantee irrigation in the South basin is only 58
hm3, which is insufficient even to avoid the current overexploitation that reaches 71 hm3. In
contrast, the quantities proposed by the NHP for transfers into the Jcar and Segura basins are
much more generous. Even if the proposed transfers are carried out, the overexploitation of
aquifers in Almera will not be solved. In any case, additional measures of demand
management will be needed to solve the problem and rebalance availabilities and uses.
Increase in the Price of Water and Reduction of External Transfers
The rise in the price of water for agricultural use, is a demand management instrument in
line with the new Water Framework Directive of the European Union, a measure which solves
the Levante scarcity problem at a lower economic and environmental cost to society, freeing
up water resources by abandoning the irrigation of less profitable crops, and rebalancing the
global supply and demand of water.
An increase of 0.12 /m3 in water prices in Levante, reduces the agricultural demand for
water to 441 hm3, with a fall of 4 percent in income and of 21 percent in net profit for farmers,
due to the lowering of irrigated cereal and woody crops acreage that are less profitable. The
impact on net income is much greater in the Segura and Jcar basins, than in Almera. The
reduction of 441 hm3 in water demand is inferior but close to the agricultural and
environmental allotment from the Ebro water transfer project of 561 hm3. With this increase
in the price of irrigation water, the volume of water freed up from agricultural uses would
reduce the need for external transfers to the Levante basins to 379 hm3, of which 120 hm3

9
Figure 2. Map of Levante Counties by Province

10
would be destined to agricultural and environmental use and 259 hm3 to urban and industrial
estimated as a 4 percent fall in income and 21 percent loss in net income. The loss of
294million in net annual income is a measure of the compensation that could be offered by
the administrations, or by other water users, so that the farmers would voluntarily accept the
raise in water prices.
A raise in water prices of 0.18 /m3 reduces the demand for agricultural water by 703
hm3 in the Levante basins, with a global fall of 6 percent in income and 30 percent in the net
profit for farmers, who would abandon the irrigated cultivation of cereals and reduce the
cultivation of woody crops. The fall in net income is greater in Jcar (-44%) than in Segura
(31%) due to the greater specialization in Segura on more profitable vegetables, and the
elevated consumption of more expensive water in Jcar, while the drop in income is
moderated in South (-8%). The water demand contraction of 703 hm3 approximates the 820
hm3 of transferred water that the NHP assigns to the three basins for urban and industrial use
(259 hm3) plus that due to prevent aquifer overexploitation plus the irrigation guarantee (561
hm3). This raise in prices provokes a fall in demand of 325 hm3 in Jcar, 327 hm3 in Segura and
51 hm3 in South, which almost covers the amounts of the water transfer designated for urban,
industrial, agricultural and environmental use of 300 hm3 in Jcar, 420 hm3 in Segura and 100
hm3 in South. Transferring the excess from Jcar to Segura, there remains a deficit of only 68
hm3 in Segura and 49 hm3 in South, which could be resolved with measures such as
desalinization and the improvement of irrigation efficiency, or internal transfers from the
western part of the South basin.
This demand management approach of increasing water prices in Levante by 0.18 /m3
solves the water shortage by balancing supply and demand of water without the need of the
enormous investment in diverting the Ebro. This measure should be seriously considered as an
alternative to the water transfer from the Ebro by those responsible for making decisions in
the autonomous (state) governments of the Ebro Valley, in the Spanish central government
and in the European Union, and by political and pressure groups. The cost to Levante farmers
of this proposal is given by their income and net profit reduction: the fall in income is only 6
percent, but the fall in net profit is sizeable attaining 30 percent. The necessary compensation
so that farmers voluntarily accept this raise in prices is given by the 423 million of yearly net
profit they lose, and could be paid by the administration or by other groups of water users.
This compensation is an alternative to society for not making the water transfer investment
diverting the Ebro. The construction costs in diverting the Ebro exceed 6 billion and if
invested in some other fashion, could produce an annual profit greater than 423 million .
Inconsistency in the transfer allocations assigned by the NHP
The diverted water will have high costs which depend on the distance from the Ebro
river, with a range of prices between 0.19 /m3 in Baix Maestrat county and 0.75 /m3 in
Campo Dalias county. These prices are well above the low prices of around 0.03-0.09 /m3

11
that farmers pay now, and these elevated water prices will only pay for themselves in counties
with high profit crops. The volume of diverted water that the Levante counties can absorb at
these prices is 863 hm3 in the Jcar basin, 215 hm3 in the Segura basin and 112 hm3 in the
South basin. These quantities contrast with the water transfer allocated for agricultural and
environmental use proposed by NHP, which is 141 hm3 in Jcar, 362 hm3 in Segura and 58
hm3 in South. Thus, in the Segura basin there is a significant problem of inconsistency in the NHP proposed
transfer, since this basin can only absorb 215 hm3 of water destined to agricultural use at the
water transfer price, which doesnt cover the NHP assignment of 362 hm3 designated to end
the overexploitation of aquifers and to meet the irrigation guarantee.
In the Jcar basin, the global agricultural water demand at the water transfer price is
greater than the NHP assignment for agriculture and environment, however this is also
inconsistent with the NHP proposal because there are several counties in which the volume of
aquifer overexploitation is similar or greater than the agricultural demand at the water transfer
price, or effective demand, in the provinces of Alicante.
Figure 3 shows the counties where water transfer effective demand is lower than
overexploitation. The farmers in these counties will not be able to pay for the same volume of
transferred water as is now overexploited, which means the overexploitation will continue.
Consequently, the proposal of the NHP does not eliminate overexploitation of aquifers by
farmers in the Segura basin and in some counties in the Jcar basin, as they will not be able to
pay the elevated price of diverted water. This incoherence in the NHP proposal demonstrates
the superiority of demand management policies that use price raises as against the NHP policy
of increasing water supply with its enormous cost to society. The management of demand is
superior as much from the economic supply and demand analysis point of view as it is from
the sustainability point of view previously mentioned.
Final Considerations
The analysis of the impact of alternative solutions to the water scarcity in Levante shows
that the ban on aquifer overexploitation as a strategy of demand management without
external transfers of water causes a fall of 20 percent in the final agricultural production and
net profit in the Levante basins. This alternative would be especially damaging for Almera,
while the negative effects would be less in Segura and Jcar. The extent of the impact of this
alternative depends on the reassignment of water among the zones where there is scarcity.
An increase of 0.12 /m3 in irrigation water price reduces water demand to a figure
that covers the NHP allotment for aquifer overexploitation for Segura and Jcar basins, and
part of the irrigation guarantee in Segura, for which the water transfer would be reduced to 379
hm3. Of this figure, 120 hm3 would be destined for agricultural use and 259 hm3 for urban and
industrial use. This solution is not too costly for farmers and the loss of 294 million of net
annual income measures the compensation that could be offered by the administration so that
farmers voluntarily accept the rise in water prices. The state administrations of the conceding

12
Figure 3. Difference between Effective Demand and Over-exploitation

13
Water demand scenarios in Levante and NHP allocation (hm3).
Jcar basin

Segura basin South basin Total Levante

Water Demand Reduction for

Agricultural Use
by banning aquifer overexploitation.

157

226

71

454

...by increasing the price by 0.12 /m3

141

263

37

441

...by increasing the price by 0.18 /m3

325

327

51

703

all uses
agricultural and environmental use

300
141

420
362

100
58

820
561

urban and industrial use

159

58

42

259

863

215

112

1,190

NHP Allocation

Effective Demand of Water for

Agricultural Use

...at prices for transferred water (0.19 to

0.75 /m3)

basin should negotiate this alternative with the central government, an alternative which
reduces the size of the water transfer to Levante from 820 to 379 hm3.
An increase of 0.18 /m3 in the price of water reduces demand by 703 hm3, a volume
close to the 820 hm3 allocated by the NHP to the three basins for all uses. This reassignment
of demand, covers the needs of the three basins by balancing the use and availability of water.
The action of raising prices 0.18 /m3 should be seriously considered by public administration
heads, political groups and lobbyists as an alternative to the enormous investment in the Ebro
water transfer project. The social cost of this measure is not excessive compared with the water
transfer social costs. The necessary compensation so that Levante farmers voluntarily accept
the raise in prices is 423 million , equal to their net annual income loss. This amount could be
paid by the administration or by water use groups, so that the society does not carry out the
investment of more than 6 billion in the water transfer project. This expenditure could be
designated to alternative investments having greater profitability.
Another criticism of the NHP water transfer proposal comes as a consequence of the
inconsistency in the county assignments of transferred water proposed by the NHP . At the elevated prices of
diverted water, farmers in the Segura basin and in some counties of Jcar cannot absorb the
allotment for agricultural and environmental use fixed by the NHP. The problem is that effective
demand at transfer prices is inferior to the aquifer overexploitation in these counties.
Consequently, with the proposal of the NHP, aquifer overexploitation cannot be eliminated,
since farmers cannot pay the elevated price of diverted water. The incoherence of the NHP
proposal is an additional argument demonstrating the superiority of water demand
management policies over and against the policy of increasing supply of the NHP.
This incoherence of the NHP could be resolved by subsidizing the price of transferred water
destined for agricultural use, charging higher prices to other user groups, thus assuring the survival
of the less profitable agricultural activities. The option to subsidize diverted water for

14
agricultural use would be costly for the non-agrarian water users of Segura. In Segura, if a
surcharge is placed on the water allotment destined to urban and industrial use in order to
subsidize the allotment for agricultural and environmental use, the surcharge would come to
168 million or 2.90 /m3 to be added to the cost of transferred water. Another more
workable alternative would be to establish the surcharge on the present urban and industrial
use in the Murcia region and on the transfer allotment destined to urban and industrial use,
which implies a surcharge for this group of users of about 0.68 /m3 and resulting in a final
price of 1.54 /m3. This option is frankly unjustifiable as much from the economic perspective
as from the environmental and territorial balance point of view, since non-profitable
agricultural activities would be maintained in an unsustainable framework, diverting water
resources that degrade the ecological functioning of the donating basin and jeopardize its
future. Political and social watchdogs from the donating basin should make sure that this
option does not occur.
The alternatives that have been presented in this study are: the ban of aquifer overexploitation,
an increase in the price of water by 0.12 /m3 with a transfer of water from the Ebro of 379 hm3, an increase
in the price of water by 0.18 /m3 with no water transfers, and the NHP alternative of water transfers of 820
hm3. These alternatives must be carefully examined to determine a rational policy what will not
be oriented towards the traditional policy of supply with enormous investments in external
transfers to basins to augment the supply of water, but rather should be oriented towards
measures of water demand management, with transfers between counties and more elevated
water prices that reflect the scarcity of the resources and do not suppose an excessive burden
on agricultural activity.
The best option for society would be an increase in water prices that balances the use
and availability of water in Levante without resorting to water from the Ebro Valley, for the
economic, environmental and territorial equilibrium reasons that have been expressed here.
But looking at the firm decision of the Spanish central government to follow through with the
Ebro water transfer project, a compromise solution between the policy of increasing the water
supply and the policy of demand management for agricultural use would consist in a moderate
increase of 0.12 /m3 in the price of water so as to reduce the water demand with a moderate
effect on income and net profit for farmers.
A demand management strategy is preferable, because it guarantees the relief of pressure
on aquifers coming from agricultural use without needing to establish strict controls on wells
and extractions, allowing water prices for agricultural use to incorporate information about the
scarcity of the resource and profitability of use. The existing communities of irrigators should
carry out the supervision of water payments, such that the demand of surface water as well as
the extraction and payment of subterranean water in farmers exploitations is controlled.
Farmers would respond to higher prices approaching the sum of economic costs of water and
environmental costs, internalizing in their private production activities the social costs of the
current externalities embodied in the provision of water resources and in aquifer depletion.

15
A final question on the water transfer not examined here is the Tragedy of the Commons
aspect of public water transfers in Spain. Since public transferred water is assigned in
proportion to existing irrigation acreage, the strategy that farmers follow is to expand irrigation
acreage in order to get a larger share of transferred water, so when water finally arrives the
scarcity is much more acute than before the transfer. This problem has already occurred thirty
years ago in Levante with the Tajo-Segura water transfer (Avell 2002).

16
References
Albiac J., M. Mema, J. Tapia, M. Feijoo and E. Calvo. 1998. Modelizacin del uso de suelo en
la zona de Flumen-Monegros I. Working Document 98/10. Unidad de Economa Agraria.
SIA-DGA. Zaragoza.
Albiac J. and J. Tapia. 2001. La Gestin de Demanda de Agua frente a la Poltica de Oferta del
Trasvase del Ebro. Working Document 01/2. Unidad de Economa Agraria. SIA-DGA.
Zaragoza.
Allen R., L. Pereira, D. Raes and M. Smith. 1998. Crop evapotranspiration. Guidelines for
computing crop water requirements. Irrigation and Drainage Paper 56. FAO. Rome.
Avell L. 2002. Las Expectativas en el Equilibrio Oferta Demanda de Agua en las Agriculturas
Intensivas Espaolas. In J. Albiac (Ed.) Ponencias del Seminario Internacional sobre Gestin
de Demanda de Agua. Gobierno de Aragn. Zaragoza. Forthcoming.
Berbel J., J. Jimnez, A. Salas, J. Gmez-Limn and A. Rodrguez. 1999. Impacto de la poltica de
precios del agua en las zonas regables y su influencia en la renta y el empleo agrario. Federacin
Nacional de Comunidades de Regantes de Espaa. Madrid.
Feijo M., E. Calvo and J. Albiac (2000). Economic and Environmental Policy Analysis of the
Flumen-Monegros Irrigation System in Huesca, Spain. Geographical Analysis 32: 5-41.
Instituto Nacional de Estadstica. 2001. Estadsticas del Agua 1999. INE. Madrid.
Martnez-Cob A., J. Faci and A. Bercero. 1998. Evapotranspiracin y necesidades de riego de los
principales cultivos en las comarcas de Aragn. Instituto Fernando el Catlico. Diputacin de
Zaragoza. Zaragoza.
Ministerio de Agricultura, Pesca y Alimentacin. 1999. Anlisis de la economa de los sistemas
de produccin. Resultados tcnico-econmicos de explotaciones hortofrutcolas de la
Comunidad Valenciana en 1998. Subsecretara de Agricultura, Pesca y Alimentacin.
MAPA. Madrid.
Ministerio de Medio Ambiente. 2000a. Libro Blanco del Agua en Espaa. Secretara de Estado de
Aguas y Costas. MIMAM. Madrid.
Ministerio de Medio Ambiente. 2000b. Anlisis Econmicos. Plan Hidrolgico Nacional. MIMAM.
Madrid.
Quintanilla A., S. Castao, J. Garca, E. Navarro and J. Montesinos. 1997. Aproximacin al
estudio de la evolucin temporal de la superficie en regado de la cuenca del ro Segura mediante tcnicas de
teledeteccin y SIG. In J. Casanova and J. Sanz (Eds.), Teledeteccin: Usos y Aplicaciones.
Secretara de Publicaciones e Intercambio Cientfico. University of Valladolid. Valladolid.
Prat N. and C. Ibaez. 2001. El Curso Inferior del Ebro y su Delta: Situacin Actual. Impacto
Ambiental del Plan Hidrolgico Nacional. Un Nuevo Modelo de Gestin del Agua para el
Bajo Ebro. Departamento de Ecologa. Universidad de Barcelona. Barcelona.
Pearce D. 2000. Public Policy and Natural Resources Management. A Framework for
Integrating Concepts and Methodologies for Policy Evaluation. Directorate General
Environment. European Commission. Brussels.
Sumpsi J., A. Garrido, M. Blanco, C. Ortega and E. Iglesias. 1998. Economa y poltica de gestin del
agua en la agricultura. MAPA-MundiPrensa. Madrid.