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This paper's main objective is to develop a farm-level water programming model to realistically model extensive margin and intensive margin responses resulting from deficit irrigation to the implementation of volumetric water charges. The highly complex programming model that uses the FAO56 water budget calculations to simulate crop water use while using relative evapotranspiration to estimate crop yield is solved using a hybrid procedure. The hybrid solution procedure uses a genetic algorithm to simplify the optimization model by fixing the irrigation schedule of each crop and then solving for the optimal water allocation amongst crops subject to water constraints. The area-based charges results showed that when irrigation application efficiency is low, irrigators could apply more water per hectare to sustain high crop yields without being held accountable if water quotas are exceeded. In contrast, irrigators with higher application efficiency could use less water than the area-based estimated water use. The results also showed that volumetric water charges cause both intensive margin and extensive margin responses. The conclusion of whether a volumetric-based water charging system will be better than area-based water charges is not straightforward because of differentiated impacts on profitability and hydrology. While irrigators will use irrigation water more efficiently and adopt more efficient irrigation technologies, their changed behavior could impact the hydrology of the water system through reduced return flows.

The integrated agricultural water pricing reform (IAWPR) is by far the most systematic, complex and longest reform in the agricultural sector of China. It has lasted for decades from the stage of reform exploration to the current reform development. IAWPR can effectively address resourced price distortion and promote rational allocation of agricultural water resources. By improving China's agricultural water pricing mechanism, government agricultural subsidy mechanism, water-saving incentive mechanism, operation and management (O&M) mechanism of irrigation systems and water quota mechanism, the reform will promote water conservation in agriculture and ensure the effective operation of irrigation systems. It is a major strategic decision made by the Chinese government to address the water security challenges facing sustainable development. This paper reviews the course of the reform, introduces the policy design, key tasks and implementation of the reform, and takes Jiangsu Province as an example to demonstrate the effect of the reform, but also discusses the problems existing in the reform.

The classified water pricing system is an effective measure for promoting the rational utilization of water resources under market mechanisms. Studying the water prices of three different types of water sources, including reservoir water, river water, and wastewater treatment plant effluent, is the basis for promoting the use of reclaimed water. However, there remains a spectrum of viewpoints on how to establish a pricing mechanism for reclaimed water at present. This study primarily focuses on the multi-level quality-separated water supply system in Yiwu City, China. It analyzes the limitations of the current water pricing formation mechanism and the externality of integrating reclaimed water into the unified allocation of multiple water sources. Based on the principles of full-cost water pricing and externality theory, a supply-side classified water pricing permit cost and pricing calculation model, covering the entire process of the social water cycle, is proposed. It focuses on the analysis of the impact of equity costs and environmental costs on supply-side classified water pricing. The Shapley value method is used for the technology of cost allocation among stakeholders to reasonably distribute the calculated water pricing of reclaimed water. The price of reclaimed water varies depending on the user type, with residential users paying 2.93 CNY/t, industrial users 4.00 CNY/t, and government allocations at 8.52 CNY/t. Compared with the classified water prices of various stakeholders on the user side of reservoir water, reclaimed water has a significant price advantage. This research demonstrates that the supply-side classified water pricing model, which includes a permit cost and pricing calculation framework, can encourage the supply of higher-quality water at corresponding higher prices, while also providing the internalization of external costs. Furthermore, the Shapley value method of cost allocation can realize the fair burden of stakeholders on the calculated water price and maintain the competitive advantage of reclaimed water prices.

Water taxation in European Union (EU) countries is adapted to local conditions and institutional trajectories and contains a variety of taxes and tariffs to finance water services and induce a higher use efficiency. After having clarified certain concepts, this work offers an overview of water taxes and tariffs charged for agricultural water use in several European Union member states, both in water-abundant areas and in water-scarce regions. Mediterranean countries, such as France, Portugal, Italy and Spain, have implemented different tax systems on agricultural water abstractions to recover the costs of the regulation, storage, and management of basin-level water services with various levels of cost recovery in accordance with the provision by the Water Framework Directive. France, Portugal, and Italy have implemented an abstraction tax applied to any water source (surface and groundwater) as an instrument to induce water saving and internalize environmental and resource costs in the irrigation sector. Despite these efforts, current taxation remains very low in the European context. On the other hand, Northern European countries (including the Netherlands, Germany and Denmark) have no fiscal instruments related to agricultural abstractions (neither for surface nor for groundwater resources).

Today, managing the drinking water supply chain and its pricing have gained significant importance. This paper presents a mathematical model using game theory for the pricing of drinking water in the competitive environment comprising a Public Water System (PWS) and a Bottled Water Plant (BWP) under government intervention. This study investigates not only the role of the government in motivating BWP to increase its green manufacturing level but also analyzes supporting the PWS to enhance the quality of tap water for households. It also evaluates the government's attempts to decrease the final price of tap water by providing subsidies for households and managing tap water demand through targeted outreach programs. This paper adopts a dynamic approach to address the time-dependent nature of precipitation and water demand, incorporating uncertainty in the tap water supply. The study also introduces models for peak and volumetric water pricing, deriving several key corollaries through parametric analysis and present a case study, modeled on real-world scenarios, to validate the proposed model. This model aids in calculating the profit for each participant and provides optimal numerical results for decision variables. Finally, the research concludes with a quantitative evaluation of the impact of these findings on key parameters, providing valuable managerial insights. The results reveal that while low tap water users benefit from cost savings due to incentives, by increasing 10% of this group PWS can accrue 23.36% more benefits. Besides, reducing the PWS's demand sensitivity to price gaps by 10% can boost PWS and BWP profits by 25% and 55%, respectively.

As water is a state subject in India, an enormous variation of irrigation water pricing across the states is noticed. Revenue collection under irrigation water charges of the states is not encouraging. The present paper reviews the structures of water pricing mechanism in different states of India and suggests a way to achieve sustainable water resources management in India. Various reports, water policy documents, and major recommendations of the irrigation commission were reviewed and analyzed. It was observed that low revenue collection is mainly due to the low rate of water taxes, no periodic revision, and flaws in the current revenue collection mechanism across the states. The water regulatory authority should be made a statutory body to manage various water uses and their fair pricing. A volumetric pricing system can be implemented in wells and tube-well-irrigated areas and for surface irrigation, and this requires considerable investment in irrigation water supply infrastructure and development of operational plans. Until a well-developed volumetric system comes into practice, the current system of revenue assessment and collection must be rationalized and simplified. An appropriate power tariff policy for rural areas and inclusion of the irrigation sector in a ground water conservation fee is required.

The irrigation water-pricing (IWP) system may prove to be an effective tool for meeting the increased demand for water. It includes the totality of costs that water users incur for irrigation purposes, based on principle, i.e., fixed, volumetric and crop-based. Factors like crop type, area irrigated, number of irrigations and total volume of water used by water users are considered for initiating the decision-making process of IWP in many countries of the world. There is no uniform set of principles for fixing water rates; a multiplicity of factors are followed, such as the capacity of irrigators to pay, recovery of water cost, crop water requirement, sources of water supply and its assurance. Linear programming, the Full-cost and Bayesian Network model, Residual value method, Principal Agent model and spot market pricing model have been used to estimate the impact of an IWP policy on water users. In the Indian context, a rationalized IWP mechanism alone will not suffice if the revenue collection mechanism is not streamlined and strengthened throughout the country. In order to develop a full-fledged volumetric IWP system in India, considerable changes need to be made in irrigation water supply infrastructure and operational plans need to be developed, which will provide a good balance between efficiency and equity objectives.

Urban water management is a critical subject for many developing countries; in Pakistan, urban water management faces challenges from weak regulatory frameworks, financial constraints, service interruptions, ailing infrastructure, rising population and climate change. Under the National Water Policy 2018, focus on urban water management envisions the incorporation of water metering and pricing as a measure to enhance water conservation and build climate resiliency measures. Investigation of the historical context for the capital, Islamabad, revealed failed prior attempts to integrate water metering and pricing. A mixed methods survey, found high dissatisfaction among the residential and commercial sectors for the municipal water service provided by the municipal authorities, with major complaints relating to service interruptions and claims of inequitable water provision. Spending on bottled water, tankers and private groundwater extraction indicated significantly higher willingness-to-pay for the provision of potable tap water; however, the concerns of residential and commercial sector remained lack of trust in municipal water suppliers. Those surveyed from the residential sector noted that the current water rate of PKR 400 was acceptable, despite over 50% of those surveyed spending more than PKR 500 on bottled water and tankers per month. Water conservation strategies remain little explored in terms of enforcement in the city, largely due to lack of market products and awareness among the population. Recommendations for improving water metering and pricing potential and resolving urban water management issues in Pakistan are presented.

The hypothesis of a rebound effect as a consequence of water saving investments is taken analogically from the Jevons paradox models in energy economics. The European Commission (EC) alert about the consequences in water stressed regions that are investing heavily in modernization of irrigation networks and systems. This paper reviews the literature, linking water savings with water diversion and water depletion, both from theoretical models and empirical evidence from the published research. In order to increase knowledge of this phenomenon, a new empirical case study is presented based on a survey of 36,000 ha of recently modernized irrigated areas in the Guadalquivir basin (southern Spain). The results of the case study illustrates the conditions that may avoid rebound effect, although the results of the available empirical evidence and the published theoretical research are diverse and lead to contradictory results. Further research is therefore needed to determine the causes and solutions of water saving investment impacts and the possible speculative rebound effect.

Serious constraints in increasing water supply have led countries around the world to seek solutions for managing water demand. Proper pricing of water is one of the foremost water demand management policies which can lead to the optimal water use. On the flip side, the quality of agricultural water is declining due to the uncontrolled abstraction of groundwater. In this regard, the present study aims to determine the economic value of different qualities of water throughout pistachio-growing regions of the Rafsanjan-Anar plain in Iran. Results reveal that the economic value and price elasticity of water demand differ among different groups. Freshwater, moderately saline water and highly saline water have the highest to lowest elasticity and shadow price, respectively. Additionally, comparison of the gross margin, which represents the profit from each activity, in two conditions including the unsustainable status quo and sustainable conditions intended by the Ministry of Energy, shows that although water use has declined by 50%, the gross margin has decreased by only 36%. This implies it is feasible to reduce water use in pistachio orchards by water re-allocation with a minimum decline in profit, which will both reduce water use and ensure high economic benefits for farmers.