Allocative efficiency and equity of alternative methods of charging for irrigation water : a case study in Egypt

In this study, five area-based methods of charging for irrigation water and four volumetric pricing instruments are evaluated with regard to their institutional cost, allocative efficiency, and equity. Linear programming models were used to estimate the response of representative farmers in Egypt"s lower Nile valley to different water supply scenarios and pricing instruments; charges were set to recover the full operating costs of providing irrigation water. Findings show that area-based pricing instruments, in particular the flat land tax, are an inexpensive and efficient means of recovering costs, as long as water supply is adequate and given Egypt"s unique system for rationing water. Volumetric pricing is more equitable than area taxes when water is limited, but more efficient only in the case of severe shortages. It is noted that imposition of water charges should be undertaken cautiously, if at all, due to the high taxation already faced by Egyptian farmers. Five figures, 13 tables, and a 38-item (1953-1982) bibliography are included.