Water Pricing in Irrigated Agriculture

Abstract

Access to water is viewed as a basic human right, a social necessity and a critical environmental resource in spite of the fact that water also has its own financial and economic values. Thus, the selection of set prices and pricing mechanisms addressing these contradicting views is remarkably complicated. On the other hand, water pricing is typically viewed as a good means to cover initial costs and sustain resources invested in water systems development, especially irrigated agriculture. Additionally, the cost of water services needs to be reasonable enough and linked to the amount of water consumed to encourage conservation. This paper illustrates criteria for equitable cost sharing, which include economic justification, efficiency and equity as well as users' acceptance. Elements of agricultural water pricing are also discussed. These elements comprise: the cost of water services, which is the total cost associated with irrigated agricultural systems development; the value of water, which reflects water's economic, social, environmental, cultural and religious values in the society; and the cost recovery mechanisms, which are the organizational and administrative measures to implement agreed upon policies to value water and services and make the collections.