Pricing for irrigation water on Japanese paddy-fields: Applicability of stochastic choice model

Abstract

Water pricing attracts great public interest for efficient water use in the world. However, there have been few studies to analyze irrigation water value, in particular with respect to Japanese paddy-fields owing to the difficulty in achieving a precise measurement for water volume on site. This paper evaluates the water pricing value in Japanese rice production by a stochastic choice model similar to the contingent valuation method. The estimation results showed that i) the derived demand for irrigation water with regard to water pricing value is inelastic, ii) the water pricing value evaluated by farmers is not high enough to compensate for the full-costs of the water supply including renewal costs of irrigation facilities and running costs, and iii) the water pricing value was affected by rice price and unit harvest of rice production. Therefore, the bidding price of paddy-field irrigation water can be simulated by the stochastic choice model, although water pricing policy is not well accepted by farmers in Japan at present.