On the Relative Efficiency of Alternative Methods for Pricing Irrigation Water and their Implementation

Abstract

The paper investigates efficiency performance of several irrigation water pricing methods, paying special attention to costs associated with implementing these methods. The volumetric, output, input, tiered and two-part tariff methods can achieve efficiency, though the type of efficiency (short or long run, first or second best) vary from one method to the other. Implementing these methods, however, entails expensive information collection and administrative activities. Per area pricing, which can not influence water input directly, is inefficient but is easier to implement and administer and require a modest amount of information. As the numerical example illustrates, differences • in implementation costs can render volumetric pricing inferior to per-area pricing.