Priority water rights. Are they useful for improving water-use efficiency at the irrigation district level?

This paper examines the effectiveness of reforming water rights regimes in the agricultural sector by replacing allocation procedures based on the proportional rule with the implementation of a priority rule that establishes security-differentiated water rights. The main objective is to assess whether this change improves the economic efficiency of water allocation at the irrigation district level, particularly during cyclical scarcity events. To this end, a Positive Mathematical Programming model is built to simulate the performance of the proposed reform in an irrigation district in southern Spain. The results show that the efficiency gains brought about by this change are very small, which casts doubt on its ability to improve water-use efficiency in the agricultural sector at the local level (i.e., irrigation district) under current local climate and water availability conditions. In any case, further research is needed to assess the suitability of this change in allocations rules at basin scale with greater farm heterogeneity, especially given the likelihood of more frequent, more intense droughts due to climate change. • A priority-based water rationing system is assessed at the irrigation district level. • The implementation of the new rationing system yields only small efficiency gains. • Efficiency increases could be banished considering actual transaction costs. • Spot water markets are a more suitable policy instrument to cope with droughts. [ABSTRACT FROM AUTHOR]