Toward Sustainable Water Resources Management in the Tunisian Citrus Sector: Impact of Pricing Policies on Water Resources Reallocation

Abstract

This study aims to analyse Tunisian farmers’ ability to pay (ATP) in a citrus area and propose a penalising price strategy based on the block‐pricing process to decrease over‐irrigation without affecting farmers’ incomes. The methodology is based on the residual imputation approach to determine farmers’ ATP, a stochastic production frontier to estimate the technical efficiency to determine optimal water irrigation quantity and calculation of the price elasticity of demand for an effective penalty and the Gini index before and after penalisation to study equity improvement. A survey was carried out on a sample of 147 citrus farms in the Nabeul Governorate, Northeastern Tunisia. The technical efficiency analysis confirms that an optimal quantity of 5000 m3/ha guarantees the maximisation of yields and profits. Above this quantity, the amount of overused water could be penalised without significantly affecting farmers’ incomes. Results also reveal that water overconsumption represents 28% of available resources and the ATP varies according to technical efficiency. Therefore, the proposed penalty system could reduce water overconsumption by 44.56% without deteriorating agricultural welfare. To improve water management as well as farmers’ welfare, this study recommends an increase in the technical efficiency level of farms to optimise all production factors for any implemented pricing policy.