Pricing irrigation water: a review of theory and practice

Increasing economic pressures on water resources are causing countries to (re)consider various mechanisms to improve water use efficiency. This is especially true for irrigation agriculture, a major consumer of water. ‘Getting prices right’ is seen as one way to allocate water, but how to accomplish this remains a debatable issue. Methods of allocating water are sensitive to physical, social, institutional and political settings, making it necessary to design allocation mechanisms accordingly. This paper surveys current and past views on allocating irrigation water with a focus on efficiency, equity, water institutions, and the political economy of water allocation.