in: John P. A. Lamers / Asia Khamzina / Inna Rudenko / Paul L. G. Vlek (eds.), Restructuring land allocation, water use and agricultural value chains, Bonn: Univ. Pr., 255-278
This paper builds on the common “production functions” type approaches, which are based merely on bio-physical and economic relationships, to estimate water productivity at field level. The paper critics the existing ‘water productivity’ approach by offering an alternative ‘water profitability’ approach defined as net value of products per unit of consumed water.Water profitability helps to analyze the farmers’ choice in applying the existing water management practices in their physical and bio-physical settings to maximize profit. Based on the analysis of survey data from the Khorezm province of Uzbekistan, it is demonstrated how an innovative methodological approach using Bayesian Network analyses identifies factors beyond bio-physical and economic domains that influence water profitability. It is argued that the production function alone does not determine water profitability rather the interplay between endowment and contextual factors influences a production function. Maximizing overall annual farm profit over a longer period is only a part of a farmer’s business objective. This should therefore be studied taking these endowment and contextual factors into consideration. It is concluded that agricultural water profitability cannot be explained by the optimization of a single objective but rather by analyzing the compromise between multiple objectives, because combination of the endowment, contextual and production factors that determine the space within which a farmer operates.