Price induced irrigation water saving: Unraveling conflicts and synergies between European agricultural and water policies for a Greek Water District

The 2003 CAP reform considerably affects cropping patterns in European agriculture. At the same time the imperatives of the Water Framework Directive (WFD) are expected to modify irrigation decisions especially in Southern Europe where irrigated agriculture utilizes about 70–80% of total water. The paper uses a nonlinear optimization model that incorporates rain‐fed, irrigated and fodder crops to examine the impacts of water pricing and CAP reform on cropping patterns, water use, irrigation technology use and farm returns in the region of Thessaly, Greece. The results indicate that, although there are important trade‐offs between water pricing (WFD) and decoupling (CAP reform), water use is more sensitive to water pricing in the post‐reform CAP.