ADRIANA ZYFI1, SPIRO GRAZHDANI1, ALMA AHMETI1
1Department of Physics and Applied Sciences, Faculty of Forestry Sciences, Agricultural University of Tirana, Albania
*Corresponding author e-mail: firstname.lastname@example.org
European Water Framework Directive promotes several measures, e.g., the adoption of adequate water pricing mechanisms or the promotion of water-saving irrigation techniques. Since production conditions such as weather and climate development are uncertain, farmers might be reluctant to invest in a water-saving but capital intensive irrigation system. Climate change will affect agricultural production through changes in water supply, such that optimal irrigation management strategies gain importance. For the Korça region, we firstly apply a stochastic dynamic programming approach to analyze a farmer’s optimal investment strategy for either a water–saving drip irrigation system or sprinkler irrigation system under weather uncertainty and assess the probability of adopting either irrigation system until the year 2040. Secondly, we develop optimal irrigation management portfolios for different degrees of risk aversion using climate data from a statistical model and the simulations for specific crops of the biophysical process model EPIC (Environmental Policy Integrated Climate). Investment in drip irrigation systems is not profitable. Sprinkler irrigation has a positive probability of being adopted for the production of sugar beets and carrots and therefore mostly shows a 100% share in the portfolio optimization. This study contributes to the literature in assessing optimal irrigation investment strategies considering weather uncertainty with two different model approaches, the stochastic dynamic programming approach and the portfolio optimization based on CVaR as a risk measure. Future research should be directed towards policy measures, e.g. implementation of water prices or equipment subsidies which can increase the probability of adopting water-saving drip irrigation systems.
Keywords: climate change scenario; EPIC model; irrigation management portfolios; water-saving irrigation techniques; weather uncertainty.