Impacts of energy price changes on the financial viability of agricultural groundwater wells in Tulkarm district, Palestine

Water scarcity has often been recognised as a major challenge to sustainable development and viability of the anticipated Palestinian State. Recently, after the evolution of increasing oil prices, energy has become another major challenge. Groundwater, which is the major source for Palestinians, depends greatly on diesel and electricity whose prices have increased drastically during the past years. This paper studies the potential impacts of diesel and electricity price changes on the financial viability of groundwater extraction from agricultural wells. The study is based on a field survey that targeted 33 agricultural groundwater wells in Tulkarm district. The results show that the financial profit from electricity-driven wells is much higher than that of diesel-driven wells. The financial profit from diesel-driven wells is highly elastic to diesel price changes. On the contrary, the financial profit from electricity-driven wells is inelastic to electricity price changes.