PRICING POLICY FOR IRRIGATION WATER

Abstract

Development of Irrigation involves heavy investments. Lack of rational pricing policy has led to many misgivings. This may be attributed to the complexities involved in the process as well as inadequate attention by planners and policy makers. This study is a modest effort in this direction. After review of the various principles of pricing and their applicability, it is seen that value or benefit based pricing is more appropriate than the cost based price. The economic and social preferences guiding the pricing policy have been identified alongwith their interaction. The following is a statement of objectives for evolving the pricing policy. 1. Efficient use of irrigation water 2. Equitable sharing of the benefit from use of irrigation water 3. Social equity including income distribution 4. Economic growth and Regional Development. Recovery Of cost has not been included explicitly in the statement of objectives. The same is implied while considering the share of the investor in the benefit and also in the objec-tive of economic growth. The cost and benefit parameters needed for pricing are obtained after putting water to maximum value uses. The value of water is increased with multipurpose use for hydropower generation as well as with conjunctive use Of surface and ground-water. The additional net benefits from the feasible complemen-tarily is considered as contributing to the value of irrigation water. The case study of Ramganga Multi-purpose Reservoir Project has been done for illustration; Optimization techniques including variable resource and parameteric linear programming has been used, Demand curves have also been derived for irrigation water for the project, The produttion function approach for pricing on the basis of marginal value product has shown that the feasible range of water use is limited and does not provide a practical solution for water charges, - The value and cost of water form the basis for pricing including the cost recovery aspect. Value productivity from individual crop production, the income a farmer gets from use' of irrigation water is a measure of his ability to pay. The ability to pay pricing recognises the contribution of the farmer to the national objectives and allows an equitable share to him,. Equity and social welfare have been considered from the view point of the society as well as the farming community. The increase in social welfare can be said to be Increase in. _ Expected increase Risk Distribution welfare - in income - premium 4. effect auantitative evaluation of risk in irrigated agriculture is done using the expected income-Variance framework, Quadratic programming is used for obtaining the E - V frontier. A method has been evolved to compensate the weaker section of the farm-ing community Whose capacity to risk aversion is low and hence has a lower expected incomei linanalytical framework has been developed to obtain the preferential weightages for the small, medium and large farmer groups. A method of redistribution has been suggested involving no tedUctiOn in the fevenue. Basing on the risk and redistribution discriminatory pricing has been suggested. The impact of pricing on cost recovery aspect is brought out. The recommended pricing policy considers equitable sharing of the benefits from the use Of irrigation water among all participants viz the government and the Various sections of the farming community.