Irrigation water pricing : the case of an agricultural cooperative in Khom Kaen province

Abstract

Agriculture is the major consumer of fresh water. In Thailand, dry season irrigated paddy cropping has expanded, and Thai farmers now face water shortages during the dry season. Despite the water shortage, it has been observed that farmers tend to use water wastefully. There are three main factors contributing to the wasteful water use: the fact that irrigation water is virtually provided for free, allowing farmers to over irrigate; farmers' lack of awareness of wasting scarce water resources; and inefficiency of irrigation systems in delivery of water. It has been argued that water should befully priced to reflect increasing production and environmental costs and scarcity. This research applies the comcept of full-cost pricing to the Nong Wai Irrigation System located in the Northeastern region of Thailand. In the calculation of full-cost prices for irrigation water, Average Incremental Costs (AIC) were used to estimate the marginal opportunity cost of irrigation water. AIC figures covering the incremental investment cost and opportunity cost of incremental volume of water are calculated to be 0.24 baht/m3 to 1.79 baht/m3. These prices for irrigation water appear relatively low if compared with the prices of water for household or industrial use. It the unit prices are multiplied by the irrigation water requirement of paddy, full-cost water charges wharges would be in the range between 376 baht/rai and 4,476 baht/rai. A preliminary field test suggests that farmers' willingness to pay for irrigation water is well below the calculated full-cost prices. The result of the interviews with 23 farmers in the Nogn Wai Irrigation area show that the farmers would be willing to pay for irrigation water, on average, at the rate of 11 baht/rai for the rainy season and 17 baht/rai for the dry season. These figures may imply farmers' lack of awareness of water being valuable resources and their resistance to paying for what used to be free.