Irrigation water pricing: Policy implications based on international comparison

This paper is concerned with the regulation of irrigation water via pricing. The main concepts underlying efficient water use are first discussed and then applied in actual practice to demonstrate empirically how readily available data can be used to implement pricing schemes that achieve efficient allocation of water. The policy discussion includes also equity considerations. The empirical findings, however, reveal that water prices have a small effect on income distribution within the farming sector, thereby supporting the view that water pricing should be designed primarily to increase the efficiency of water use, leaving income distribution considerations to other policy tools.