Design of an incentive-based tool for effective water saving policy in agriculture

This study proposes a novel agri-environmental payment scheme aimed at saving irrigation water. The design incorporates an outcomes-based reward system, ensuring effective savings of water volumes in on-farm uses. A choice experiment (CE) was conducted with 259 farmers, in a pilot study of a water-stressed region with Mediterranean climate. Values for each attribute were estimated using the Random Parameter Logit Model. The environmental payment scheme resulted as receiving good acceptance by the interviewees. The duration of the commitment has the highest relevance in the farmers’ choice behaviour, followed by the water savings effort. In general, the findings show that farmers are willing to save water in response to the tested payment scheme. Based on the significance of covariates, however, the variable of the farm's crop specialisation is critical in the farmer's choice. The main findings suggest that it is advisable to target the payment scheme based on crop profitability, territorial dimension, and taking into account the groundwater salinity map.