| heal.abstract |
We determine the ""optimal"" management of a closed growing system with multiple sources of water, of price decreasing with quality. The management that balances marginal costs of water and fertilizers with marginal yield loss is determined. By using a number of yield response curves, in a couple of different cases (Holland and Mediterranean basin), we show that, with realistic prices both of resources and of produce, closed systems are financially viable only in two cases: 1. in regions with good water or 2. with high-value crops that offset the costs of ensuring good water (such as rain collection or desalinisation), so that there is no advantage for a grower to maintain a closed loop whenever the quality of irrigation water is poor. This means that a price structure of water resources that shifts the economic optimum towards poorer irrigation water has the consequence that the irrigation loop cannot be closed. In other words, there is no way that low-value crops using poor irrigation water may still be profitable under stricter environmental rules. We conclude that in view of the environmental impact, it would be advisable for irrigation and local authorities in horticultural areas either to provide good water at a relatively high price or to consider subsidizing investment costs of on-site desalinization plants, rather than stimulating use of poor quality water, or attempting to prevent pollution through unrealistic regulations. This means that local authorities, seriously planning to reduce agricultural pollution, should either provide incentives for growers to switch to less sensitive or more valuable combinations of crops, or contemplate developing other economic activities than agriculture. |
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