Strategic Policy Options to Improve Irrigation Water Allocation Efficiency: Analysis on Egypt and Morocco

program to observed levels of the endogenous variables. Such a model can yield smoother
response to changes in prices and constraints.

The agricultural sector model of Egypt has also been used to derive shadow prices for
irrigation water. Water shadow prices can be derived using limited information via mathematical
programming models (Shunway; Howitt et al., 1980, Kulshreshtha and Tewari; Chakravorty and
Roumasset; Bontemps and Couture). The scheme to obtain these prices is as: (a) For a given
output price, estimate the quantity of water maximizing the profit of the agricultural sector; (b)
vary the level of water quantities to deduce the shadow prices under different levels of water.

Optimal crop production is calculated under various resource constraints and prevailing

input-output prices. The water shadow price ( ^λ) constraint is the marginal value of irrigation
water. Shadow prices for water are determined by solving sum of the producers’ and consumers’
maximization problem. The procedure can be compactly written as the following:

Max

n
∑
i =1

m₁

⁵ ∙t ∙ C_i = ∑ Drz j + - D²Q_i
j =1           2

Si=yiLi

(1)

(2)

(3)

Di ≤ Si

m
∑Li≤L
i=1

m

∑Liai ≤ W : [λ]

i=1

n

∑b L ≤Z

ij i j

i=1

L_j ≥0

(4)

(5)

(6)

(7)

(8)