Efficacy of influencing factors in the decision-making of irrigation water pricing: a review

The irrigation water-pricing (IWP) system may prove to be an effective tool for meeting the increased demand for water. It includes the totality of costs that water users incur for irrigation purposes, based on principal, i.e., fixed, volumetric and crop-based. Factors like crop type, area irrigated, number of irrigations and total volume of water used by water users are considered for initiating the decision-making process of IWP in many countries of the world. There is no uniform set of principles for fixing water rates; a multiplicity of factors are followed, such as the capacity of irrigators to pay, recovery of water cost, crop water requirement, sources of water supply and its assurance. Linear programming, the Full-cost and Bayesian Network model, Residual value method, Principal Agent model and spot market pricing model have been used to estimate the impact of an IWP policy on water users. In the Indian context, a rationalized IWP mechanism alone will not suffice if the revenue collection mechanism is not streamlined and strengthened throughout the country. In order to develop a full-fledged volumetric IWP system in India, considerable changes need to be made in irrigation water supply infrastructure and operational plans need to be developed, which will provide a good balance between efficiency and equity objectives.