The marginal product value of irrigation water for potato and vine cultivation in the Sandveld region, South Africa

Abstract

The advent of grid electrification in the Sandveld region of South Africa in the 1980s increased the utilisation of groundwater resources for commercial irrigation purposes. In the wake of the consequent increased pressure on the resource, it behooves landowners to use water more productively and responsibly. This paper calculated the marginal product value (MPV) of irrigation water for potatoes and vine production in this region to assess and to allow the comparison of the productivity of irrigation water with other commodities and regions. However, the results suggested that the scope for leveraging changes to water use behaviour in the Sandveld solely through water pricing is limited. Given that electricity is a critical input for the utilization of groundwater, we suspect that the price of electricity would be a suitable lever to influence irrigation behaviour. In light of the imminent Government electricity price hikes, we advise some further investigation on the impacts these impending hikes will have on irrigation farming in the study area. We suspect that pumping costs (as opposed to the price of water itself) will become the most limiting factor for irrigation water use in the Sandveld in the foreseeable future. A mixture of water and energy pricing strategies therefore lends itself as a more pragmatic policy approach to follow in order to influence irrigation behaviour, as opposed to a sole focus on water pricing.