How to link agricultural productivity, water availability and water demand in a risk context?

The importance of water scarcity in irrigated agriculture in Spain provides the rationale for this paper, which analyses and evaluates the risk of water shortage on the economic result of this kind of agriculture. The main objective is to monitor this risk on a real-time basis. For this aim, we first estimated a number of regression models that explain irrigated agricultural productivity based on crop price indices, a time trend and water availability. These models, which correct for auto-correlation, yield good explanatory power. Second we carried out ex ante simulations of agricultural productivity using fitted distribution functions of water balance. The risk model framework provides the basis for a real time drought management system through a variety of distribution functions of expected economic results, which can be revised on a monthly basis before the beginning of the irrigation season. The results of the simulation show how this kind of risk model can be used to anticipate the effects of droughts and complement the hydrological models used to manage water storage in years of scarcity. Different risk profiles are identified. For example, in Genil-Cabra we found that the resilience of the system after a drought period is very high, whereas in La Plana de Castellón the risk of irrigation area abandonment is increasing year by year. In Genil-Cabra the estimated losses were 60 million euros in 2007. The models were applied to some of the most agriculturally relevant irrigation districts in Spain