This paper deals with the problems of estimating irrigation water demand. We propose an original method of estimation in two steps. First, we develop a dynamic programming model in order to explain the optimal irrigation management plan. Based on a microeconomic approach describing the farmer's behavior, this economic model, introducing an agronomic model, and an algorithm of solution search, is used to compute a realistic database. Second, these data are used to estimate profit functions by a non-parametric method. The irrigation water demand function is estimated using a non-parametric derivation procedure.
An application to irrigation water demand is proposed in the southwestern area of France where conflicts appear frequently. The same results appear for different climates: for small quantities of water available, irrigation water demand seems to be quite inelastic. If one increases the total quantity of water available, the shape of the curve changes and the demand appears more elastic. The threshold price at which the changes in price-responsiveness appears, depends on weather conditions and range from 0.30 F/m3 in a wet year to 1.60 F/m3 in a dry year. These results are crucial information for the regulator in order to analyze the effects of a water regulation policy, based on prices. The impact of an increase in the water price will depend not only on the climate but also on the location of the initial and final prices on the demand function.
JEL classification: C14, C16, Q15