section the macro-micro linkage framework is presented, with focus also on the links between policies and their impact on the various sectors in the economy.

# **Description of the policy interventions and simulations in the 4 countries**

To put things in perspective, this section details and compares the policies used in the studies of the four countries (Morocco, Mexico, South Africa and Turkey) conducted by the World Bank that are the focus of this paper. While each of the four countries practices different policy interventions, and thus, different outcomes, still there are several policies that, at least nominally, are similar across the countries. We will describe very briefly the policies (also summarized in a table in Annex 2).

## **Mexico**

The joint strategy of the Government of Mexico and the World Bank for 2004-2006, under the framework of the Country Partnership Strategy, identified four priorities with regard to challenges for development. These are: reduction of poverty and inequality; increased competitiveness; strengthening of institutions; and promotion of sustainable development. Under the latter, the water sector has received special attention, with four priority aspects in need to be addressed: overexploitation of surface and ground water; minimization of the use of scarce water for crops with low added value; difficulty to reach strategic consensus among key actors due to institutional complexities that impede efficient coordination among key actors; inadequate management of water rights; and high subsidies for the pumping of surface and ground water and inadequate water prices.

## **Morocco**

The potential trade arrangements of Morocco with the EU are likely to increase competition for cereals while increasing opportunities for the export of fruits and vegetable products. Domestic policies support directly and indirectly the production of other commodities such as sugar, bananas, livestock and vegetable oils. Other policy barriers include adjustment in capital markets to encourage foreign direct investment, particularly in those sectors for which Morocco can compete in international markets. Irrigated fruit and vegetable products are among these sectors.

Closely linked to the macro economic issues is the question of a policy to better allocate water within and among irrigated perimeters to maximize the returns to this scarce re-source. This entails a reconsideration of how water is priced and allocated to farmers, concerns with the equity of this process and poverty reduction. Moreover, due to the uncertain temporal and spatial effects of weather, policy must also take into consideration the mechanisms by which these uncertainties can be managed, and particularly so in an environment of a continuing growth in non-farm water demand. A scheme of the feedback links between economy wide (macro) and farm-perimeter-district level (micro) policies is presented in Table 1.

## **Turkey**

Turkey embarked on an ongoing structural adjustment and stabilization program towards the end of 1999. Agriculture has been selected to undergo heavy adjustment due to the ineffective set of policies and its increasing burden on government expenditures in the last decade. Another important factor is the rural-to-urban migration and the increased demand 8