Design and Evaluation of Irrigation Water Pricing Policies for Enhanced Water Use Efficiency

Abstract

Utilizing economic instruments, especially water pricing, is a useful strategy in the management of water demand. In this study, water pricing policies along with incentive strategies through subsidies to farmers are implemented and simulated for improving the efficient use of water. To determine the crop pattern configuration and water allocation schemes, a genetic algorithm (GA) based optimization model is developed to obtain the potential maximum net benefit. The economic value of water is obtained using a combination of mathematical programming and residual methods within an optimal framework. In this model, water prices increase at the same time that subsidies are given to farmers to encourage them to use efficient irrigation technologies. Results indicate that implementation of this scenario increases the net benefit to US$249.3 million per year, which is 40% higher than the current historical value. Because of the efficiency improvements in the use of water, the economic value of water increases from