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.
This paper analyzes the economy-wide gains obtainable from the allocation of surface irrigation water to its most productive use, and evaluates a decentralized mechanism for achieving this result in a spatially heterogeneous environment. The focus country for the analysis is Morocco. The analysis is based on a general equilibrium model that, in addition to the rest of the economy, captures 82 agricultural production activities, 66 of which are in seven separately identified water districts that span the entire country. The results suggest that a decentralized water trading mechanism could increase agricultural output by 8.3 per cent, affect the rental rates of other agricultural inputs at the national level, including labour, and have economy-wide effects that entail a decline in the cost of living, an increase in aggregate consumption, and expansion of international trade.
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