Efficacy of influencing factors in the decision-making of irrigation water pricing: a review

Abstract

The irrigation water-pricing (IWP) system may prove to be an effective tool for meeting the increased demand for water. It includes the totality of costs that water users incur for irrigation purposes, based on principal, i.e., fixed, volumetric and crop-based. Factors like crop type, area irrigated, number of irrigations and total volume of water used by water users are considered for initiating the decision-making process of IWP in many countries of the world. There is no uniform set of principles for fixing water rates; a multiplicity of factors are followed, such as the capacity of irrigators to pay, recovery of water cost, crop water requirement, sources of water supply and its assurance. Linear programming, the Full-cost and Bayesian Network model, Residual value method, Principal Agent model and spot market pricing model have been used to estimate the impact of an IWP policy on water users. In the Indian context, a rationalized IWP mechanism alone will not suffice if the revenue collection mechanism is not streamlined and strengthened throughout the country. In order to develop a full-fledged volumetric IWP system in India, considerable changes need to be made in irrigation water supply infrastructure and operational plans need to be developed, which will provide a good balance between efficiency and equity objectives.

Determinants of Farmers’ Acceptance of the Volumetric Pricing Policy for Irrigation Water: An Empirical Study from China

“…Additionally, despite the lack of previous survey reports on VPP acceptance on the part of farmers, many studies have discussed the VPP's implementation difficulties. It is believed that the high requirements of measurement technology and irrigation facilities in the VPP are important factors contributing to the implementation difficulties, which then lead to costs related to the irrigation facilities, measurement, management, and maintenance [20,21,[26][27][28].…”

“…The VPP is based on the principle that irrigation water charges increase with water usage, which conforms to the price leverage concept of water conservation management [21].…”

“…First, the VPP often requires setting different volume quotas for individual farmers, and the determination of these quotas must consider various factors, such as specific farming systems, crop structures, climate conditions, and hydrological resources, which makes the process more complex and rigorous [29]. The second constraint is that volumetric pricing imposes higher demands on water users in terms of irrigation quality; however, optimisation of the irrigation water supply infrastructure, implementation of refined maintenance and management, and dynamic and effective scheduling of water sources require substantial investment [21]. Thus, meeting the measurement conditions and overcoming the constraint limitations imply increased costs and water prices.…”

Analysis of Water Pricing Policy Effects in a Mediterranean Basin Through a Hydroeconomic Model

“…Water pricing 1 has been generally identified in the recent literature as a valid water demand instrument to help solve problems of water scarcity and competition (Al-Rubaye 2019;Bierkens et al 2019;Gallego-Ayala et al 2011;Portoghese et al 2021;Upadhyaya et al 2022). Molle and Berkoff (2007) offer a review of concepts and experiences in irrigation water pricing, identifying practical gaps and constraints of alternative irrigation pricing policies.…”

“…This is due to the particular features of each sector, not being possible to simply extrapolate water pricing schemes from other sectors. In this sense, Upadhyaya et al (2022) argue that there is no uniform set of principles for fixing water tariff in the irrigation sector: "a multiplicity of factors is followed, such as the capacity of irrigators to pay, recovery of water cost, crop water requirement, sources of water supply and its assurance". Cooper et al (2014) consider that in order to achieve effectiveness (reduction of water consumption) and social equity (minimizing regional disparity in terms of negative economic effects), the pricing scheme should comply with the following principles: i) economic efficiency (tariffs should reflect the cost of service provision); ii) revenue adequacy (costs are recovered over the life of any assets, including operating and maintenance costs); iii) administrative simplicity (practical to implement); iv) flexibility (capacity to accommodate changing supply and demand) and v) equity (ability to pay by vulnerable consumers).…”