EVALUATING WATER POLICY OPTIONS IN AGRICULTURE: A WHOLE‐FARM STUDY FOR THE BROYE RIVER BASIN (SWITZERLAND)

In this study, we evaluate the impact of an increased volumetric water price and the implementation of a water quota on management decisions, income, income risk and utility of an arable farmer in the Broye River Basin, western Switzerland. We develop a bio‐economic whole‐farm model, which couples the process‐based crop growth model CropSyst with an economic decision model at farm scale and use a genetic algorithm as optimization technique. This integrated modelling approach is employed to optimize the farmer's management decisions with regard to crop land use as well as crop‐specific nitrogen fertilization and irrigation intensities under different climate and water policy scenarios. Our results show that the farm's water demand will increase by almost 100% under climate change. However, both, an increased volumetric water price and a water quota, are under current and future expected climate conditions effective policy measures to reduce the farm's water consumption. At the same time, due to adjustments in the crop mix as well as in crop‐specific nitrogen fertilization and irrigation strategies, both policies lead to losses in farm income and in the farmer's utility of only about 10%. Nevertheless, a higher water price as well as a water quota increase under future expected climate conditions the crop farm's downside risk exposure (i.e. probability of low farm incomes). Copyright © 2013 John Wiley & Sons, Ltd.