however, imports of durum wheat and bread wheat balanced the domestic demand (Table 11).
The total land for cultivation decreased on LSI and PRI while the land for cultivation increased
on rain-fed area.
Contrast of the effects on agricultural sector welfare and irrigation water demand under
different policy scenarios is shown in Figure 4. Unlike the model results for Egypt, welfare
increases in the Morocco case. Welfare gains in Morocco are derived from the other two sub-
sectors, rain-fed and PRI land, as the cost and revenue shocks are on LSI land. More rain-fed
land is cultivated and more vegetables and fruits are produced on both PRI and rain-fed land.
Compared with the water pricing scenario, an output tax at a 10% rate (OUTP-10%) could reach
the same welfare level and reduce more irrigation water demand. On the other hand, an energy
tax at a 200% rate (ENG-200%) reduced irrigation water demand as much as water pricing
policy did.
Figure 5 plots the comparison of water demand elasticity under different policy scenarios.
Water demand elasticities of energy remain the same with low and high tax rates; however, the
output tax can be more elastic as the tax rate increased. Comparing with the elasticity of water
pricing at cost recovery level, output tax is relatively more elastic.
Figure 6 illustrates the rank of revenue generated from each policy scenario under
analysis. Energy tax and output tax at a higher level can also generate a comparable amount of
revenue compared with the extra revenue generated from water pricing at cost recovery level.
However, if output tax is just a lower price on the products, it is consumers, not the government,
who receive the benefit. High energy tax policy can also be another attractive alternative in terms
of collecting revenues; however the tax rate (200%) may be too high to be implemented.
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