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This paper analyzes two of the main challenges facing agriculture in Europe: technological changes and the application of the principle of cost recovery to water services. Our study takes into account the economic, social, and ecological consequences associated with these measures. Specifically, we consider the effects of these two situations not only on water consumption, but also on environmental, social, and economic indicators. Our study also includes two institutional scenarios involving the possibility or impossibility of performing transactions in formal water markets. By using a computable general equilibrium (CGE) model for the economy of Catalonia, a region located in Northeastern Spain, our results suggest that institutions related with water markets matter in terms of the effects that agricultural policies cause on water resources. They also suggest that greater economic efficiency is not necessarily optimal if we consider social or environmental criteria

Water and Agriculture in a Mediterranean Region: The Search for a Sustainable Water Policy Strategy