THE ECONOMIC VALUE AND COST RECOVERY OF WATER IN THE EGYPTIAN IRRIGATED AGRICULTURE

This article provides estimates for on-farm irrigation costs paid by farmers and the imputed economic value of water for the main crops in the study sample and identifies the appropriate method for the Egyptian conditions, and measures the impact of irrigation water consumption, water savings and gross margin in Egypt. Data were collected from a formal survey for 80 farmers conducted in 2016/2017 to collect data on the farm budgets of the crops prevailing in Al Satamony Village located at Dakahlia Governorate (Belkas District). A residual method was employed to impute the economic value of water and an assessment of crop-based irrigation water cost recovery policy was made in terms of its impact on irrigation water consumption and gross margin. Besides, the study conducted an online opinion poll about the possibility to recover a part of the operation and maintenance (O&M) costs of irrigation in Egypt and the irrigation cost recovery method relevant to the Egyptian case. The results from this study confirm the need for additional investments to improve the efficiency of the existing irrigation system whereas, such investments are regarded as public good putting more pressure on the national budget. However, Egyptian farmers do not pay for water used in their farms. They bear only the on-farm irrigation costs. Thus, the Government of Egypt (GoE) considered more direct methods of recovering costs from farmers in order to reduce the government’s recurrent fiscal burden while improving the efficiency and sustainability of O&M services. Rice and clover ranked first in terms of high shadow price of irrigation water, followed by sugar beet, wheat and maize whereas, sugar beet and clover gained the highest water productivity. The analysis showed that the crop-based scheme is the irrigation cost recovery policy most relevant to the Egyptian case. Such policy achieves water saving of at least half a million cubic meters for the old lands of Dakahlia Governorate. However, farm gross margin decreases as the total on-farm irrigation costs based on the crop-based irrigation water tariff increase. This implied the importance of such a policy that directly affects farmers’ behavior towards reducing irrigation water consumption and slightly decreases farm gross margin, as well. To conclude, there is a need for sufficient farmer’s access to knowledge and improving communication channels between farmers and skilled agricultural extension personnel about the harmful effect of over-irrigation, the recommended crop water requirements, the role of water user associations (WUAs), and water-saving management techniques before introducing the proposed irrigation cost recovery policy. Besides, a public-awareness campaign on the need to recover a part of the O&M irrigation costs is one of the key actions needed before introducing the proposed irrigation cost recovery policy in order to sustain the water supply and delivery system, upgrade poorly served areas, and ensure continued provision of services. Ensuring farmers acceptability for the cost recovery mechanism and the irrigation water tariff is clearly understood to represent no more than the cost of services rendered should be put into consideration before introducing such policy. Finally, introducing the proposed irrigation cost recovery policy in Egypt helps recovering part of O&M costs, encourage efficient resource use, encourage efficient provision of