Inefficient Water Pricing and Incentives for Conservation

Farmers often buy water using fixed fees—rather than with marginal prices. We use two randomized controlled trials in Bangladesh to study the relationship between prices, adoption of a water-saving technology, and usage. Our first experiment shows that technology only saves when farmers face second finds an encouragement voluntarily convert hourly pumping charges does not save water. Taken together, efforts conserve work best but simply giving option for pricing is insufficient trigger investments reduce irrigation demands. (JEL O13, Q12, Q15, Q16, Q25)