Research Reports
Characteristics of Agricultural Water Supply and Demand, and Related Policy Implications
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AuthorLim, Youngah
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Publication Date2016.01.07
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Original
This study introduces the attributes of agricultural water as an economic commodity, characteristics of agricultural water supply and demand, methodologies to estimate these characteristics, and policy implications related to the predicted results of empirical studies applying the methodologies.
There have not existed the consistent and objective legal system to solve the water conflicts between the agricultural sector and others, or conflicts inside the agricultural sub-sectors, and previous studies analyzing the economic characteristics of agricultural water are limited. The empirical studies about the agricultural water supply and demand based on the agreement of experts and stakeholders inside/outside the agriculture industry will help to resolve expected water conflicts as well as prepare for the future droughts in agricultural land. These efforts to collect relative data sets and construct feasible empirical economic models should be considered when discussing and enacting “Water Law” or similar integrated water management systems.
Analysis of agricultural water supply characteristics is based on the production theory to estimate marginal and average costs of the water supply. The information about the marginal and average costs is closely related to pricing the agricultural water and charging systems. Korean agricultural water suppliers are currently the Korea Rural Community Corporation and municipal governments with market power, and whether or not this structure is like a natural monopoly is another issue to analyze. Analysis of agricultural water demand can be conducted by estimating a production function and derived water demand function, applying the mathematical programming method, the general equilibrium model, and various evaluation methods, and it is important to choose an appropriate methodology in the context of study purposes and targets.
The empirical application of economic methodologies to agricultural water supply and demand characteristics will be possible after checking the currently available data sets and how to complement them or generate additional data sets. In addition, is needed to discuss how to construct the economic estimating models such as the general equilibrium model in the long-run and necessity of the integrated council such as “Agricultural Water Council.”
Researchers: Lim Youngah, Kim Hongsang
Research period: 2015. 6. ∼ 2015. 11.
E-mail address: limy@krei.re.kr
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