Fiscal perspective on irrigation water pricing: a case study of Karnataka, India

Pricing publicly-provided irrigation water at its scarcity value is desirable for both efficiency of usage and fiscal recovery, but paradoxically is least feasible in regions of water scarcity. This paper presents a case study of Karnataka state in India to argue that, given the rent-seeking possibi...

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Bibliographic Details
Published in:Water policy 2006-04, Vol.8 (2), p.171-181
Main Author: Rajaraman, Indira
Format: Article
Language:English
Subjects:
Case studies
Compliance
Developing countries
Entitlement
Feasibility studies
Irrigation
Irrigation water
LDCs
Market prices
Pricing
Rent
Rent-seeking
Scarcity
Trading
User groups
Water
Water rates
Water scarcity
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Summary:Pricing publicly-provided irrigation water at its scarcity value is desirable for both efficiency of usage and fiscal recovery, but paradoxically is least feasible in regions of water scarcity. This paper presents a case study of Karnataka state in India to argue that, given the rent-seeking possibilities in crop-specific water rates and the infeasibility of metering in the developing country context, a flat quantum of water entitlement per net hectare of command area, with an accompanying fixed charge per net hectare is best. Such a flat entitlement is crop-neutral and de-links quantum of use from the price, which can then be set at a (moving) compliance-maximising rate. Even if the implicit rate charged per unit of water is below scarcity value, so that irrigation remains publicly subsidised, it would not thereby be inefficiently allocated. Local user groups may be the best mechanism for enforcing the flat entitlement and could oversee any informal water trading that might develop.
ISSN:1366-7017
1996-9759
DOI:10.2166/wp.2006.0011