Efficiency, Equity and Cost Recovery Implications of Water Pricing and Allocation Schemes in Developing Countries

Abstract

Six alternative methods of allocating and pricing irrigation water used in developing countries are compared and ranked on the bases of allocative efficiency in production, equity in the distribution of income, and cost recovery to the provisioning authority. Several pricing and nonpricing allocation methods are compared, both between and among these categories. Comparisons and rankings are based on measures of efficiency, equity and cost recovery derived within the framework of a Cobb‐Douglas production system. It is found that nearly unique rankings prevail, but that the rankings depend crucially on the relative capital intensities between small and large producers. Rankings presented here should provide significant information to people choosing among alternative resource allocation methods. Nous avons comparé et classé six méthodes différentes de distribution et de tarification de ľeau ďirrigation utilisées dans les pays en développement, à partir de lew efficacité quant à la production, à ľéquité dans la répartition du revenu et au recouvrement des coûts par le fournisseur. Plusieurs méthodes de distribution avec ou sans tarification sont comparées entre ces catégories ainsi qu'au sein de chacun ďelles. Les comparaisons et le classement sont fondés sur des mesures de ľefficacité, de ľéquité et du recouvrement des coûts déivées dans le cadre ďun système de production Cobb‐Douglas. On constate que le classement est presque toujours le même mais qu'il dépend avant tout de la prédominance relative de capital entre les petits et les gros producteurs. Les classements présentés ici devraient s'avérer utiles pour ceux qui doivent choisir entre plusieurs méthodes de distribution des ressources.

Why is agricultural water demand unresponsive at low price ranges?

“…It is therefore unjust to expect the farmers to bear the full burden. They argue that the cost of irrigation development should be legitimately shared by both consumers and producers (Sampath, 1983(Sampath, , 1992Rhodes and Sampath, 1988).…”

Evaluation of irrigation projects and water resource management: a methodological proposal

“…The change in 1 In the field of assignation and distribution we can mention the works of Young (1992), Cummings and Nercissiantz (1992), Domínguez Vila (1996) andFernández de Castro (1997). With regard to economic valuation, productivity and water prices we should highlight the contributions of Rhodes and Sampath (1988), Dinar (1995, 1997), Moore and Dinar (1995), Schaible (1997), Martín and Rodríguez (1992), Sumpsi et al (1998) and Martín et al (2000). Finally, Spulber and Sabbaghi (1997) study the most significant problems in water economics.…”

Equity in Domestic Water Rates Design

“…Consequently, there is no consensus as to the best price alternative, despite the existence of numerous theoretical studies aimed at defining the rates that should be charged for water consumption (Rhodes and Sampath 1988;Elnaboulsi 2001;Hall 2001;Tsur 2001;Boland and Whittington 2001, among others), because the ideal system depends in each case on users' characteristics and preferences, as well as the specific objectives set by the water utility or by the public authorities (Dalhuisen et al 2000;Renzetti 2001).…”