EU are identified separately. There are five different macroeconomic policy instruments that are embedded in the data, including taxes, subsidies, tariffs, and payments for water.

Morocco‘s irrigated agriculture is organized in 9 water districts (ORMVAs), 2 of which are isolated and barely involved in the economy. Thus, the modeling framework refers to the remaining 7 ORMVAs. Among the 82 agricultural and agriculture-related production activities, 66 are in crop production, five in livestock, and 11 in processing agriculture, both up and downstream from the farm firm. To capture the spatial nature of irrigated agriculture, 66 crop production activities are further distinguished according to whether they are within or outside the seven ORMVAs. Among the 33 activities within the water authority perimeters, 21 are irrigated crop production and 11 are rainfed. Because water is either costly or presently impossible to transport between perimeters, the seven ORMVAs are further subdivided into 20 perimeters.

The data are organized into a social accounting matrix (SAM). The data include perimeter level information on water charge fees, cropping mix, water and land allocation by crop and area, employment of labor and capital and intermediate input use by crop. National level data on employment, trade, nonfarm production and resource flows are also entered into the SAM. These data are used to calculate the parameters of the model.

Unlike a standard SAM that often includes only national level data, the Morocco SAM in this study is multi-dimensional, taking into account crop production activities. A schematic presentation of the major features of the macro framework is presented in Figure 3.

Data for the farm model ( ̳micro‘ model) are from the same data source as those for perimeters in the ̳macro‘ model, i.e., each perimeter is aggregated from farm level data. For this reason, the production activities in the farm model are compatible with the ̳macro‘ CGE model. For the analysis preformed here, the representative farm is chosen from the irrigated area, and hence, only irrigated crops are included in the farm model.

The farm model accounts for monthly water allocation by crop. Typically, the representative farm only grows some of the crops produced in the perimeter. Only a number of crops (10) are included in the farm model. Just as the case with the CGE model, the farm model is calibrated to the data in such a way that the solution of the farm model for the base period reproduces the observed farm data exactly.

While the farm model only captures farmer‘s decision-making in production activities, the CGE model, as a general equilibrium model, captures inter-sectoral interactions of the decision making process in the economy. For this reason, prices, including prices for output and factors of production, are endogenously determined by the CGE model. Factor markets clear such that total available supplies of land, capital, and labor have to equal their respective demand. In the farm model, the representative farmer faces given prices for output and factors. The farm model treats the supply of land and monthly supplies of water as constraints. Otherwise, the farmer can hire labor, employ capital and use intermediate inputs at exogenously (to the farmer) given prices without supply side constraints. But these prices are endogenously determined in the economy wide markets. A schematic presentation of the major features of the farm-level model is given in Figure 4.

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