Impacts of irrigation efficiency improvement on water use, water consumption and response to water price at field level

Increasing irrigation efficiency has been suggested as a solution in water scarce areas but its potential rebound effect (increased ex-post water consumption) is receiving growing attention; paradoxically, although improved irrigation efficiency may reduce water use, it may also increase water consumption. This paper undertakes an analytical review of the microeconomic foundations of the effects of water-saving investments and the resulting irrigation efficiency on water use and consumption. Moreover, it analyses the relationship between irrigation efficiency, water demand and water pricing. Findings show that improving efficiency would significantly reduce water use, though the impact on water consumption would be negligible even if there is a radical increase in water cost. Thus, the potential rebound effect would not be related to irrigation efficiency, but rather to other factors such as irrigated area expansion, crop-mix changes, and market forces.