Pricing Irrigation Water in Mexico: Efficiency, Equity and Revenue Considerations

The withdrawal of water for i r r igat ion in the d ryer regions of Mexico already accounts for some 91% of potential availabil i ty. Fur ther expansion of i r r igated acreage, therefore, must re ly more on increased water use efficiency ra ther than increased supply from engineering works. A pr ime ins t rument to br ing about such an improvement could be an appropriate water pr ic ing s t ruc ture . The f i rs t three sections of the paper present the conceptual i ssues involved, as well as the empir ical findings which show that i r r i ga tion f a rmers pay, on average, less than 10% of actual water costs . Water use efficiencies are shown to be less than 50% but are ma r k edly higher in i r r iga t ion d is t r ic t s with volumetr ic compared to those with fixed water charges. The fourth section develops some representa t ive pr ic ing s t ruc tures that are designed to account for both efficiency and income dis tr ibut ional goals, while the last one addresses some of the likely implementat ion problems.