The effects of water policies and uncertainty on small-scale farms in Petrolina-Juazeiro, Brazil: An application of land use systems analysis

The Petrolina-Juazeiro area of the Sao Francisco River Basin (SFRB) is cited as an example of how investment in irrigated agriculture can help create pathways out of poverty. Public investment in water storage, irrigation perimeters, and infrastructure facilitated the area's transformation into a competitive producer of labor-intensive, high-value export crops. Some policymakers believe that the sharp reductions in poverty fueled by increases in employment opportunities in agriculture and agriculture-related industries can be replicated throughout the Brazilian northeast by expanding irrigated areas. Policymakers managing water resources must account for the needs of diverse users, finding management solutions that are socially optimal and environmentally sustainable. However knowledge gaps exist regarding present and future water demand and how water use decisions are taken by water use groups such as small-scale agriculturalists.;The economic performance of six common land use systems in the Petrolina-Juazeiro area are compared using the land use system (LUS) model. The LUS examined include rainfed goat and sheep, furrow irrigated mango, micro-sprinkler irrigated mango, furrow irrigated onion and melon, seeded table grape, and seedless table grape. Special attention is paid to water use, water productivity, and employment generated by each LUS. For two of the crops investigated (mangos and table grapes), uncertainty in yield and output price is incorporated into the model to provide further insight into policy questions.;The results suggest that water price policies aimed at encouraging improved irrigation efficiency by producers may not impact producers using the largest volumes of water per hectare. Policymakers concerned with generating employment may wish to promote both table grape systems and the onion-melon LUS. Both grape production systems and the mango micro-sprinkler system perform well according to measures of water productivity, however they require substantial investments in conveyance technology before producers can generate income. Incorporating variation in yields and output prices into the LUS model slightly raises the expected net present value for the mango and table grape LUS. Policymakers interested in reducing risk associated with irrigated agriculture for small-scale producers should invest in policies that reduce constraints farmers face in the adoption of drip and micro-sprinkler irrigation technologies.