Adoption of Modern Irrigation Technologies in the Presence of Water Theft and Corruption: Evidence from Public Irrigated Areas in Medjez El Bab

In this paper we investigate the potential advantages and limitations encountered by adoption of modern irrigation technologies in the presence of water theft (by simple manipulation of water meters). We propose a mechanism in a centralized management framework combining the use of monitoring, punishment, and subsidies. We show that water theft and technology adoption interact in two competing ways. On the one hand, new technology adoption does reduce theft by enhancing the WA’s monitoring capabilities. On the other hand, savings incurred from simple water theft reduce the farmers’ desire and willingness to absorb the cost of implementing these new irrigation technologies. We show that technological adoption is more likely, when monitoring costs are low and punishment levels are high. Moreover, the adoption of water-saving technologies such as drip systems increases with increasing water prices, though within the range of low to medium prices. The basic analysis is extended to deal with the problem of regulatory capture when monitoring responsibility is delegated to a monitor whose expertise allows her to hide information from the Water Authority in order to identify with the cheating farmer. We demonstrate that collusion is more likely when monitoring costs are high and punishments rates are low. We test the model’s predictions on data from two public irrigated areas in Medjez El Bab (Tunisia). The results give strong confirmation about most of the theoretical findings. But, various economic, socioeconomic, physical and geographical factors can either counteract or supplement these effects.