Irrigation infrastructure charging: Non-rival access, cost sharing and exclusion

Many irrigation areas are facing the problems of aging infrastructure and a declining revenue base from which to fund maintenance and repair activities. The push toward full cost recovery for storage and delivery services arising from water reform policies means that some supply utilities will need to consider the strategic rationalisation of infrastructure to remain viable in the long term. Consideration must also be given to the implementation of appropriate charging regimes for infrastructure access to ensure that irrigators are not sub-optimally excluded from the delivery system. Below the point of congestion, non-volumetric charges for access to irrigation infrastructure are analogous to a pricing regime for a non-rival but exclusive good. Two charging models for infrastructure access are analysed in this paper – socialised cost sharing and serial cost sharing – in the context of the efficient provision of a non-rival good. Findings indicate that over-rationalisation may occur under a socialised cost sharing model but that this potential is eliminated under a serial cost sharing model.