Introduction to the special issue on: Management of water resources for agriculture

Water is a major constraint to continued and sustainable agricultural development both in the developed and developing countries. A recent 2020 study by the International Food Policy Research Institute identified water as the most critical constraint to food self-sufficiency and security. The food and agriculture sector is currently facing a multitude of problems relating to water resources that will need to be addressed by economists and policymakers in the coming years. The most important issue is that demand for water is increasing both in agriculture and, in particular, in the municipal sector at significant rates. Given the scarcity of additional freshwater generation capacity and its prohibitive cost, agriculture will in the future have to produce ever-increasing quantities of food with decreasing quantities of water. A second concern of more recent vintage is the environmental impact of agricultural water use. Increased chemical use and the intensification of agricultural systems around the world have led to serious water quality issues. Water laws and compacts both within water districts and at the regional and transboundary levels, are often insufficient in addressing these emerging quantity and quality concerns, mainly because these laws and institutions were developed in an era when water supplies were abundant and quality was not a severe problem. How can the available water resources be better managed both to enhance the efficiency of food production as well as the quality of the environment? The selection of papers in this volume focus on an important set of issues, beginning with water quality issues at the farm and industry levels, to problems of basinwide management, and finally dealing with regional and transboundary water conflicts. Among other things, they focus on the dynamics of managing multiple water sources and investing in backstop technologies such as desalination, the on-farm and industry-level variability in the response to water quality legislation, the design of mechanisms for dealing with farm-level heterogeneity, the importance of modeling water allocation and quality at the level of the river basin, and the strategic and institutional issues relating to the cross-border flow of water resources. A serious concern of water policy makers in both developed and developing countries is the growing threat of pollution from chemical use. The effect of nutrient runoffs, build-up of salinity and other chemicals in the water on downstream agricultural and environmental uses of water has given rise to a host of management problems in both developed and developing countries. This has resulted in attention being drawn to the efficiency of farm level chemical use. Khanna, Isik and Winter-Nelson point out that uniform application of nutrients on the field may achieve a plant nutrient uptake of as low as 30% of the applied nitrogen. They do an economic analysis of Site Specific Crop Management (SSCM) technology, which uses information on the spatial variability of soil, and targets input applications that match this variability. Various studies have shown that SSCM has the potential to increase crop yields, reduce input use and input residues in the soil. However, adoption rates among farmers have been surprisingly low, in spite of the significant economic and environmental benefits. An option value framework is used to examine the extent to which farmer uncertainty about output