Valuing Cost of Groundwater Overexploitation: Evidences from Apulian Land Values

An assessment of economic value of groundwater resources in the context of agricultural production is carried out, with a focus on the challenges posed by both qualitative and quantitative issues. The research draws upon data collected from a comprehensive survey to 274 farmers in hot-spot irrigated area of Apulia region. Hedonic analysis is performed, utilizing various attributes of farmland as explanatory variables. Land attributes include, among others, the type of access to irrigation services (collective vs. self-supplied), salinity and quantity-related issues of water services. In pursuit of a nuanced understanding of the heterogeneous responses of farmers to groundwater-related issues, a Finite Mixture Model (FMM) is implemented. Farmland where groundwater over-exploitation is already detected reports minor economic value. The findings of this study provide valuable insights for policymakers seeking to enhance groundwater sustainability.