Cost Analysis for Water Distribution in Agriculture
This paper uses a Translog form to estimate the water distribution cost for an irrigation consortium. The consortium operates under conditions of the under-utilization of facilities; thus, to achieve full cost recovery, water charges must be set at a higher level than efficiency. As a consequence, farmers may decide to reduce their use of the public irrigation service and instead exploit groundwater. The estimated Translog function explains the costs of water services throughout the irrigated area, and identifies items for which pricing does not accentuate the competition between the use of surface water and groundwater. Based on the estimated coefficients, a hypothesis is hence presented for pricing water provided by the consortium.
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