abundance of base wine in stock and good harvest years led to lower market prices of
grapevines, a situation that had to be solved with
government intervention. In 2016, the national
government spent USD 11.2 million to improve
the market price through reductions in wine
stock. Considering the external factors in grape
production, institutions have deployed programs
for assessing potential climate risks and minimizing effects of contingencies: for example,
through programs like hail storm protection and
rural insurance (Gibbons et al. 2016). Institutions
seek to help farmers to improve their agronomic
management practices through smarter use of
agrochemicals. Uncertainty in the local currency
jeopardized the competitive gains of microdevaluations since input providers adjusted faster to real values in USD.
When it comes to production factors, grapevine remains a labor-intensive crop in Mendoza,
with a variable share of intermediate inputs
according to location, grape quality, and training
system. On average, the total production cost is
USD 3,824 per hectare, composed of labor
(72.1%), machinery (11.4%), agrochemicals
(9%),
and
physical
inputs
(7.4%)
(COVIAR/OVA 2018). Regarding labor policies,
institutions lagged behind in terms of formality
and flexibility of the labor force. In addition to
the higher employment costs for firms and small
vineyards, the deployment of alternative labor
standards for seasonal and permanent workers
did not affect the level of employment in the
sector. On the contrary, these measures actually
led to a lower share of permanent labor with
higher benefits. Seasonal workers can count on a
regulated salary that is constantly updated by
institutions. These measures improve resource
allocation and flexibility but also incentivize
farm workers to seek short-term employment
(Van den Bosch 2008). Altogether, the review of
the agricultural policies shows an active public
sector in the regulation of all production factors.
However, in the framework of the political
economy, we will further discuss the general
environment of these regulations along with the
effectiveness and suitability of the economic
measures.
5 Framework for Analysis
For those farmers that have a well, groundwater
becomes a common pool resource with lowexcludability for pumping it (OECD 2015),
which means that stakeholders with a drilling
permit can pump water at the marginal cost
whenever they need it and they cannot be
excluded from using the aquifer’s resource.
Natural conditions of underground resources
have historically raised concerns about characteristics such as boundaries of the reserve, the
hydrogeological uncertainties, irreversibility of
mismanagement, and information asymmetries
(Booker et al. 2012; NRC 1997; Theesfeld
2010). Following the complexity of the political
economy of underground resources, the institutional tripod framework is used in this study to
assess the tripartite institutional performance by
decoupling the roles of organizations and stakeholders at different levels (OECD 2015;
Meinzen-Dick 2007). This methodology helps to
understand the underlying power structures,
decision making stages, and incentives of participants in the political process.
Meinzen-Dick (2007) introduced the framework acknowledging that there is no single
solution for all water problems in policy analysis.
An objective manner of analysis is to decompose
the policy instruments into regulatory, economic,
and voluntary. The regulatory instruments frame
the command and control of water policies, i.e.,
the ownership of permits, pollution standards,
and abstraction. In most cases, water permits are
attached to agricultural land and are nontradable.
OECD (2015) and Theesfeld (2010) agree on
the importance of analyzing institutions
involved, power structures, and the independence
of decision makers to comprehend the political
process of water policy. The economic
138
F. S. Riera and B. Brümmer
grapevines, a situation that had to be solved with
government intervention. In 2016, the national
government spent USD 11.2 million to improve
the market price through reductions in wine
stock. Considering the external factors in grape
production, institutions have deployed programs
for assessing potential climate risks and minimizing effects of contingencies: for example,
through programs like hail storm protection and
rural insurance (Gibbons et al. 2016). Institutions
seek to help farmers to improve their agronomic
management practices through smarter use of
agrochemicals. Uncertainty in the local currency
jeopardized the competitive gains of microdevaluations since input providers adjusted faster to real values in USD.
When it comes to production factors, grapevine remains a labor-intensive crop in Mendoza,
with a variable share of intermediate inputs
according to location, grape quality, and training
system. On average, the total production cost is
USD 3,824 per hectare, composed of labor
(72.1%), machinery (11.4%), agrochemicals
(9%),
and
physical
inputs
(7.4%)
(COVIAR/OVA 2018). Regarding labor policies,
institutions lagged behind in terms of formality
and flexibility of the labor force. In addition to
the higher employment costs for firms and small
vineyards, the deployment of alternative labor
standards for seasonal and permanent workers
did not affect the level of employment in the
sector. On the contrary, these measures actually
led to a lower share of permanent labor with
higher benefits. Seasonal workers can count on a
regulated salary that is constantly updated by
institutions. These measures improve resource
allocation and flexibility but also incentivize
farm workers to seek short-term employment
(Van den Bosch 2008). Altogether, the review of
the agricultural policies shows an active public
sector in the regulation of all production factors.
However, in the framework of the political
economy, we will further discuss the general
environment of these regulations along with the
effectiveness and suitability of the economic
measures.
5 Framework for Analysis
For those farmers that have a well, groundwater
becomes a common pool resource with lowexcludability for pumping it (OECD 2015),
which means that stakeholders with a drilling
permit can pump water at the marginal cost
whenever they need it and they cannot be
excluded from using the aquifer’s resource.
Natural conditions of underground resources
have historically raised concerns about characteristics such as boundaries of the reserve, the
hydrogeological uncertainties, irreversibility of
mismanagement, and information asymmetries
(Booker et al. 2012; NRC 1997; Theesfeld
2010). Following the complexity of the political
economy of underground resources, the institutional tripod framework is used in this study to
assess the tripartite institutional performance by
decoupling the roles of organizations and stakeholders at different levels (OECD 2015;
Meinzen-Dick 2007). This methodology helps to
understand the underlying power structures,
decision making stages, and incentives of participants in the political process.
Meinzen-Dick (2007) introduced the framework acknowledging that there is no single
solution for all water problems in policy analysis.
An objective manner of analysis is to decompose
the policy instruments into regulatory, economic,
and voluntary. The regulatory instruments frame
the command and control of water policies, i.e.,
the ownership of permits, pollution standards,
and abstraction. In most cases, water permits are
attached to agricultural land and are nontradable.
OECD (2015) and Theesfeld (2010) agree on
the importance of analyzing institutions
involved, power structures, and the independence
of decision makers to comprehend the political
process of water policy. The economic
138
F. S. Riera and B. Brümmer