charge) are found. Tiered pricing for irrigation water is common in the state of California (Rao, 1988) and Israel (Yaron, 1997b). BolarLd and Wittington (2000) review the recent movement towards increasing block tariffs in developing countries.

# _2.2 Non-volumetric Methods_

In many cases, volumetric pricing is not feasible or desirable. In which case, non-volumetric pricing is utilized. There are several such pricing methods found in common practice for irrigation service: output pricing, input pricing, area pricing, and betterment levy pricing. Output pricing methods charge a water fee for each unit of output produced by the user. This requires knowledge of user outputs, but obviates the need for water use measurement (prohibitively expensive in many cases). In the case vwhere output is readily observable this method will save in transaction costs. Input pricing methcds charge users for water consumption through a tax on inputs. An example of this might be a pe r unit charge for each kilogram of fertilizer purchased.

Area pricing is the most common method of irrigation water pricing found. Bos and Walters (1990) in their survey of farmers on 12.2 million HA globally, found that in more than 60% of the cases water is charged on a per unit area basis. Under this pricing mechanism users are charged for water used per irrigated area, often depending on crop choice, extent of crop irrigated, irrigation method, and season. Rates are typically greater for pumped water from storage than for gravity flow from stream diversion. This method is easy to implement and administer and are best suited to continuous flow irrigation, which may explain its prevalence in the irrigated world (Easter and Welsch. 1986; Easter and Tsur, 1995). Area pricing does not necessarily imply lack of sophistication however. For exarnple the _warabandi_ system in Punjab, Pakistan and Haryana, India is a relatively complex system that combines elements of volumetric pricing with area pricing. This rotational method for equitable allocation of irrigation water fixes flows by day, time, and duration of supply proportional to irrigated area (Bandaragoda, 1998; Perry and Narayanamurthy, 1998).

Betternent levy pricing is used to captur e the implicit value of irrigation water by charging water fees per unit area, based on increases in land values. This is essentially a hedonic approach to the valuation of crop irrigation services (Young, 1996). Theoretically irrigation services should increase economic activity in a region benefiting all those living there. Levy charges are used to share these benefits (costs) amongst all direct beneficiaries in the service area (Easter, 1980; Easter and Welsch, 1986b).

# **_2.3_** _Market-based Methods_

There are significant water resources available from water conservation and reallocation in areas with irrigation and scarce water supply (Hearne and Easter, 1995; Vaux and Howitt, 1984; Tsur, 1997; Easter and Feder, 1998). To accomplish this it has been argued that water utilities should charge higher prices from water (Rogers, 1992). The problem often is that users have been able to use political power to prevent major increases in water prices, especially irrigation water (Easter, Dinar, and Rosegrant, 1998; T hobani, 1998). Water rates that may have been at one 5