Valuing Improvements in The Water Rights System in South Africa: A Contingent Ranking Approach¹

Abstract

In the context of increasing water scarcity, understanding is growing that irrigation water rights are important and that a lack of effective water rights systems constitute a major reason for inefficient water management. This study carried out a contingent ranking experiment to study how smallholder irrigators in South Africa would value potential changes in water rights. Three specific dimensions of water rights, relevant for the South African case, are considered: duration, quality of title and transferability. Results indicate that smallholder irrigators are prepared to pay considerably higher water prices if improvements are made in the water rights system. This implies that the proposed interventions in the water rights system would improve the efficiency and productivity of the smallscale irrigation sector. The increased willingness to pay could furthermore also assist South African government to reach the objective of increased cost recovery.

Exploring the scope for transboundary collaboration in the Blue Nile river basin: downstream willingness to pay for upstream land use changes to improve irrigation water supply

“…We believe that the credibility of this context is of paramount importance, and deserves more investigation. Like Speelman et al ., (2010) and Veettil et al ., (2011), we demonstrate that choice behavior and associated WTP for improvements of irrigation water supply and use efficiency depend on the institutional context in which they are measured. Future work in this specific area of irrigation water pricing and valuation has to take this context into account.…”

“…Most of the land used by the agricultural sector is leased to tenants or to private entrepreneurs, such as operators of large-scale mechanized rainfed farming (Omer, 2011). Contrary to previous studies (e.g., Speelman et al ., 2010), private water rights were therefore not considered an appropriate characteristic in the experimental design here. Instead, water pricing was directly related to the increased availability of irrigation water supply and cost recovery.…”

“…In the economic valuation literature, the economic efficiency of water allocation is primarily related to water use in irrigated agriculture, the largest water consumer, particularly water pricing (e.g., Johansson et al ., 2002; Dinar and Mody, 2004; Tsur, 2005) and irrigation water supply uncertainty (e.g., Rigby et al ., 2010). Only recently has the economic valuation of irrigation water been placed in a broader institutional-economic context of water rights and irrigation water governance (e.g., Speelman et al ., 2010; Veettil et al ., 2011).…”

The importance of irrigation water rights: lessons from South Africa and Tunisia

“…The econometric analysis of the data collected in the CR experiment is based on the rank-ordered logit model (Beggs et al 1981), which as an extension of the basic conditional logit model of McEadden (1974) is grounded in random utility. For a detailed description of the experiment and the econometric model, see Speelman et al (2010b).…”

“…Applications of this approach to evaluate the degree of the efficiency of a prevailing institutional sUnacture were recently developed by some authors for the case of water rights (e.g. Crase et al, 2002;Herrera et al, 2004;Frija et al, 2008;Speelman et al, 2010aSpeelman et al, , 2010b. Sitnilarly Barton & Bergland (2010) and Rigby et al (2010) use choice experiments to value irrigation water under different institutional settings.…”