Pricing Irrigation Water by unknow

Author:unknow
Language: eng
Format: epub
Publisher: Taylor & Francis Group

Main Results from the District, Perimeter, and Farm Level Analysis

Some of the main results from the district, perimeter, and farm level analysis suggest that:

Volumetric pricing is necessary to achieve efficient allocation and can also be used with a limited influence on income distribution. However, its implementation costs are relatively high, prohibitively so in some cases. A combination of per-area charging and water quotas can achieve an impact similar to volumetric pricing but only in terms of efficiency. A combination of tiered pricing, taking care of variable costs, and per-area charges, taking care of the fixed costs, can achieve an impact similar to volumetric pricing alone with regard to both efficiency and equity. This combination performs better than volumetric pricing alone with regard to cost recovery.

The various district analyses demonstrate that similar pricing policies may have quite different impacts under different conditions. Farms with steep demand curves, (inelastic demand), will be less responsive to price increases than farms with flatter demand curves, (elastic demand).

The response of farmers to water prices is another important finding that can be expressed in quantitative terms. The nature of that response, the derived demand, reflects various endogenous conditions, principally whether the farm is large or small, rich or poor, and the crop mix grown; and exogenous conditions, namely water supply reliability, water institutions, prices of other inputs and outputs, extension and availability of appropriate technologies, production quotas, access to market and credit. Effective policy interventions therefore must address all of these conditions.

Farmers’ abilities to respond to changes in water price depend largely on their capacity to adapt, for example, by changing either technology or crop mix, or both. If farmers are restricted to a small set of crops because of agronomic– climatic conditions or lack of know-how caused by inappropriate extension services, it will be reflected in the shape of their derived demand. Small and poor farms are also characterized by a narrow technology and crop mix set of alternatives. If farmers are restricted to growing crops on only a certain amount of land, or if marketing restrictions limit the amount they can produce, these constraints will also be reflected in the shape of derived demand. Water allocation institutions within the perimeter also affect farmers’ abilities to adapt.

For example, in the Loskop irrigation district in South Africa, the wide range of crops that can be grown gives farmers flexibility in responding to policy interventions. Farmers in Turkey's Harran Plains Irrigation Scheme, on the other hand, can grow only a few crops, and this limitation is reflected in their derived demand for irrigation water. In the case of the R'Mel perimeter of the Loukkos Regional Agricultural Development Authority in Morocco, the sharp drop in derived demand is a result of a constraint on strawberry production dictated by European Union regulations. The derived demand reveals that 25% of the water in the perimeter can be used for a high-value crop, but the rest of the available water is used in production of very low-value alternatives.

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