Efficiency and equity considerations in pricing and allocating irrigation water
Economic efficiency has to do with how much wealth a given resource base can generate. Equity has to do with how that wealth is to be distributed in society. Economic efficiency gets far more attention, in part because equity considerations involve value judgements that vary from person to person. The authors examine both the efficiency and the equity of different methods of pricing irrigation water. After describing water pricing practices in a number of countries, they evaluate their efficiency and equity. In general they find that water use is most efficient when pricing affects the demand for water. The volumetric, output, input, tiered, and two-part tariff schemes all satisfy this condition and can be efficient although whether efficiency is short-run or long-run, first- or second-best, varies. Pricing schemes that do not directly influence water input -- per-unit areas fees for example -- lead to inefficient allocation. But they are usually easier to implement and administer and require less information. The extent to which water pricing methods can effect income redistribution is limited, the authors conclude. Disparities in farm income are mainly the result of factors such as farm size and location and soil quality, but not water (or other input) prices. Pricing schemes that do not involve quantity quotas cannot be used in policies aimed at affecting income inequality. The results somewhat support the view that water prices should not be used to effect income redistribution because water prices are a poor vehicle for reducing income inequality. But pricing schemes that involve water quota rules can reduce income inequality. The authors demonstrate this with a two-rate tiered pricing scheme combined with equal quotas of the cheaper water.
|Date of creation:||31 May 1995|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sampath, Rajan K., 1992. "Issues in irrigation pricing in developing countries," World Development, Elsevier, vol. 20(7), pages 967-977, July.
- Blackorby, Charles & Donaldson, David, 1978. "Measures of relative equality and their meaning in terms of social welfare," Journal of Economic Theory, Elsevier, vol. 18(1), pages 59-80, June.
- 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.
- repec:cup:cbooks:9780521296762 is not listed on IDEAS
- Seagraves, J.A. & Easter, K. William, 1982. "Pricing for Irrigation Water," Economic Reports 8445, University of Minnesota, Department of Applied Economics.
- Baumol, William J & Bradford, David F, 1970. "Optimal Departures from Marginal Cost Pricing," American Economic Review, American Economic Association, vol. 60(3), pages 265-83, June.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:1460. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.