ABSTRACT
Fresh water is a scarce good that is essential for sustaining life, development and the environment and it should be managed accordingly (ICWE 1992). However, water policy has failed to consider water as an economic good and has focused instead on guaranteeing the provision of this resource
at subsidized prices. In Southern Europe, this paradigm has resulted in a signifi cant irrigation expansion that in many basins has led to a hypertrophic irrigated agriculture as compared to the scant water resources available (Ward and Pulido-Velazquez 2008). In some of these basins, agricultural water use has grown to such an extent that it is now larger than renewable water resources, meaning that groundwater stocks are being depleted (EEA 2009). This ingrained overexploitation of water resources has reportedly been aggravated by more recurrent and intense droughts as a result of climate change. The resultant water crisis is causing EU institutions to make new laws and policies to foster water conservation in the agricultural sector (EC 2000; EC 2008). In this context, there is an increasing concern over the effects that agricultural policies (e.g., the Common Agricultural Policy) or exogenous agricultural shocks (e.g., world food prices fl uctuations) may have over water use. While the former issue is frequently addressed in the literature (see for example Kampas et al. 2012; Dono et al. 2010), to the best of our knowledge there are no studies available on the effect that fl uctuations in world food prices may have over water use in the EU.
