Cost-reflective pricing: empirical insights into irrigators’ preferences for water tariffs

Abstract

Using prices to improve the efficiency with which water resources are allocated is now widely accepted in principle if somewhat difficult to achieve in practice. Whilst there are some technical difficulties associated with full-cost recovery in irrigation, the lack of political will to tackle reform remains a significant impediment. This article reports the results of an empirical investigation into farmers’ preferences for changes to water prices and tariff structures. We conclude that some of the preferences of farmers are conducive to price reform. We also find evidence that public subsidy of infrastructure in irrigation is not always aligned with the preferences of farmers.