Political Economy of Energy
Subsidies for Groundwater Irrigation
in Mendoza, Argentina
Félix Sebastián Riera and Bernhard Brümmer
Abstract
Natural resources’ policies in Latin America
are rarely long-term, consistent and power
independent. The Argentinian province of
Mendoza achieves both characteristics,
groundwater management showed flaws with
ensuring quality and availability. Energy subsidies for agricultural irrigation have relied too
much on a permanent policy, and are subject
to political maneuvering whenever their stability is at risk. Following a tripod framework
to review the institutional settings of the
water-energy nexus, we review the policy
effectiveness and analyze policy outcomes in
light of the nexus. Although the majority of
policy tools have become demand-oriented
during the last 20 years, they do not provide
consistent economic incentives for agricultural
producers when considering environmental
degradation of groundwater resources. The
economic tools designed for the agricultural
sector aimed to sustain profit levels by
influencing the market conditions rather than
improving farm-level efficiency. Under water
scarcity periods and subsidized energy, we
observed changes in grapevine prices and
groundwater table levels that suggest a relationship with the exploitation of the Carrizal
aquifer. To explore the resource in a sustainable manner and further save energy and
money, subsidy effectiveness should be reconsidered. Policy-makers could gradually shift
the annual budget from energy subsidy into
optimization programs for water and energy,
which would upgrade resource management
and stimulate sustainable development.
Keywords
Water-energy nexus Á Resources policies Á
Water scarcity Á Groundwater depletion Á
Grapevine production
1 Introduction
In the area of agriculture and resource economics, challenges for optimization are continuously updated. The increasing demand to
provide food with limited resources emphasizes
the need for more efficient production under
changing environmental conditions (FAO/IWMI
2018). The reinvigorated interest in the water–
F. S. Riera (&) Á B. Brümmer
Department of Agricultural Economics and Rural
Development, Georg-August-Universität Göttingen
(DARE-GWDG), Platz der Göttinger Sieben 5,
37073 Göttingen, Germany
e-mail: sebary@gmail.com
F. S. Riera
Department of Agricultural Economics and Policy,
Facultad de Ciencias Agrarias, Universidad Nacional
de Cuyo (FCA-UNCuyo), Almirante Brown 500
Chacras de Coria, M5528AHB Mendoza, Argentina
© Springer Nature Switzerland AG 2021
S. Hülsmann and M. Jampani (eds.), A Nexus Approach for Sustainable Development,
https://doi.org/10.1007/978-3-030-57530-4_9
129
Subsidies for Groundwater Irrigation
in Mendoza, Argentina
Félix Sebastián Riera and Bernhard Brümmer
Abstract
Natural resources’ policies in Latin America
are rarely long-term, consistent and power
independent. The Argentinian province of
Mendoza achieves both characteristics,
groundwater management showed flaws with
ensuring quality and availability. Energy subsidies for agricultural irrigation have relied too
much on a permanent policy, and are subject
to political maneuvering whenever their stability is at risk. Following a tripod framework
to review the institutional settings of the
water-energy nexus, we review the policy
effectiveness and analyze policy outcomes in
light of the nexus. Although the majority of
policy tools have become demand-oriented
during the last 20 years, they do not provide
consistent economic incentives for agricultural
producers when considering environmental
degradation of groundwater resources. The
economic tools designed for the agricultural
sector aimed to sustain profit levels by
influencing the market conditions rather than
improving farm-level efficiency. Under water
scarcity periods and subsidized energy, we
observed changes in grapevine prices and
groundwater table levels that suggest a relationship with the exploitation of the Carrizal
aquifer. To explore the resource in a sustainable manner and further save energy and
money, subsidy effectiveness should be reconsidered. Policy-makers could gradually shift
the annual budget from energy subsidy into
optimization programs for water and energy,
which would upgrade resource management
and stimulate sustainable development.
Keywords
Water-energy nexus Á Resources policies Á
Water scarcity Á Groundwater depletion Á
Grapevine production
1 Introduction
In the area of agriculture and resource economics, challenges for optimization are continuously updated. The increasing demand to
provide food with limited resources emphasizes
the need for more efficient production under
changing environmental conditions (FAO/IWMI
2018). The reinvigorated interest in the water–
F. S. Riera (&) Á B. Brümmer
Department of Agricultural Economics and Rural
Development, Georg-August-Universität Göttingen
(DARE-GWDG), Platz der Göttinger Sieben 5,
37073 Göttingen, Germany
e-mail: sebary@gmail.com
F. S. Riera
Department of Agricultural Economics and Policy,
Facultad de Ciencias Agrarias, Universidad Nacional
de Cuyo (FCA-UNCuyo), Almirante Brown 500
Chacras de Coria, M5528AHB Mendoza, Argentina
© Springer Nature Switzerland AG 2021
S. Hülsmann and M. Jampani (eds.), A Nexus Approach for Sustainable Development,
https://doi.org/10.1007/978-3-030-57530-4_9
129