Appraising Alternatives for Allocating and Cost Recovery for Irrigation Water in Egypt

Alternative approaches to allocating and recovering costs for water on Egyptian farms are proposed and evaluated in accordance with the societal objectives of allocative efficiency, equity of income distribution and cost recovery. A linear programming model of a study area in Egypt's northern Delta predicts farmers' response to the proposed cost-sharing instruments over a range of water supply conditions. Transactions costs for each charging instrument are estimated and incorporated into the allocative efficiency analysis. Flat land charges, supplemented by water quotas in the event of increasing water scarcity, best achieve societal objectives in the current and prospective Egyptian situation. Volumetric charging instruments were judged to be somewhat less desirable, due to higher tangible and intangible costs of implementation. The results highlight the importance of transactions costs, the degree of water scarcity and other governmental revenue raising policies in determining an appropriate charging mechanism.