Devising irrigation water tariffs with overconsumption penalties
Abstract
The paper analyses an irrigation water tariff model to control overconsumption by implementing effective penalties that can be seen as a supplementary tool to crop-specific quotas. This progressive pricing system is based on the financial loss that farmers would face when having to reduce their irrigation water consumption in order to comply with the commitment to achieving more restrictive quotas. Results show that a single fixed price system (with a flat rate) is costlier to farmers than the differentiated tariff system, which distinguishes the amount of water that exceeds the established allocation from the quantity below. This system of irrigation water pricing and overconsumption penalties, aimed specifically at each crop, facilitates efficient utilisation and the ability to adjust this consumption to resource availability and current economic and market situations, especially in response to crop subsidies. The practical barriers to implementing differentiated tariffs per crop with overconsumption penalties are the availability of irrigation water marginal productivity and net profit functions, and having to install technological equipment to control the water being used by individual farmers.Downloads
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