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On the Relative Efficiency of Alternative Methods for Pricing Irrigation Water and their Implementation

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  • Tsur, Yacov
  • Dinar, Ariel

Abstract

The paper investigates efficiency performance of several irrigation water pricing methods, paying special attention to costs associated with implementing these methods. The volumetric, output, input, tiered and two-part tariff methods can achieve efficiency, though the type of efficiency (short or long run, first or second best) vary from one method to the other. Implementing these methods, however, entails expensive information collection and administrative activities. Per area pricing, which can not influence water input directly, is inefficient but is easier to implement and administer and require a modest amount of information. As the numerical example illustrates, differences • in implementation costs can render volumetric pricing inferior to per-area pricing.

Suggested Citation

  • Tsur, Yacov & Dinar, Ariel, 1996. "On the Relative Efficiency of Alternative Methods for Pricing Irrigation Water and their Implementation," Working Papers 232800, Hebrew University of Jerusalem, Center for Agricultural Economic Research.
  • Handle: RePEc:ags:huaewp:232800
    DOI: 10.22004/ag.econ.232800
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    File URL: http://ageconsearch.umn.edu/record/232800/files/hebrewuniv-workingpapers-9611.pdf
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    References listed on IDEAS

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    1. Laffont, Jean-Jacques & Tirole, Jean, 1986. "Using Cost Observation to Regulate Firms," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 614-641, June.
    2. George F. Rhodes & Rajan K. Sampath, 1988. "Efficiency, Equity and Cost Recovery Implications of Water Pricing and Allocation Schemes in Developing Countries," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 36(1), pages 103-117, March.
    3. Laffont, Jean-Jacques & Tirole, Jean, 1987. "Auctioning Incentive Contracts," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 921-937, October.
    4. Harry de Gorter & Yacov Tsur, 1991. "Explaining Price Policy Bias in Agriculture: The Calculus of Support-Maximizing Politicians," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(4), pages 1244-1254.
    5. Feldstein, Martin S, 1972. "Distributional Equity and the Optimal Structure of Public Prices," American Economic Review, American Economic Association, vol. 62(1), pages 32-36, March.
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    Keywords

    Crop Production/Industries;

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