technical aspects that readers are referred to, the technical publications cited in this paper provide the necessary details.

The four country-based studies reveal difficult tradeoffs among various policy objectives, including weights put on different sectors, regional advantages, and general economic efficiency gains versus social impacts. The results underscore that no one policy is able to achieve a balanced set of outcomes for the various objectives **.** The comparison demonstrates the usefulness of the macro-micro linkage framework in addressing the effectiveness of various policy interventions and providing information that policy makers can use to rank the policy interventions according to their preferences among the objectives.

The paper starts by identifying the importance of irrigated agriculture as the sector that uses most of the available water in a country. Then the theoretical framework of the macro-micro linkage approach is set and explained and contrasted against the various economy-wide studies in the literature that are reviewed in Annex 3 so that the advantages and drawbacks of each are fully understood.. The results of the analyses of the macro-micro linkage approach that was applied to Morocco, Mexico, South Africa and Turkey are presented and contrasted so that the tradeoffs between different social allocation preferences are clearly identified in terms of their impact on sectoral productivity, on welfare distribution, using economy-wide performance indicators. The paper is concluded by identifying areas (e.g., climate change, globalization, food crisis, migration, distributional effects) in need of more research and will provide a proposed framework for their inclusion in such analysis. The paper provides a set of recommendations for a balanced policy intervention options that take into account the competing needs by various sectors and the existing institutional arrangements in several countries, including the countries analyzed (Saleth and Dinar 2004:Chapter 7).

# **Special attention to irrigated agriculture**

Irrigated agriculture is an important sector in many developing, as well as developed countries. It uses a major share of the available water resources in the country, provides employment opportunities to rural population, and supports, in some countries, their food security goal.

Most economic analyses of policy intervention in the irrigation sector address questions at the farm or regional levels, or at most, at the sector level. Results of the various interventions vary, depending on the local institutional setups. However, many countries are also interested in valuing irrigation water resources and their services at the national level for another, albeit often related, reason. Aside from directly setting or estimating the value for water at the farm-gate, policymakers are interested in the implicit impacts of macroeconomic policies on the irrigated agricultural sector, especially as related to agricultural trade reform. The Doha WTO negotiation was centered on the issue of removing barriers to agricultural trade. For developing countries in particular, the foreign exchange that can be potentially earned from growth in exports of crops is critically important to financing imports, not only of food grain and meat products, but other intermediate factors of production that embody advances in technology for all sectors of the economy (Roe et al., 2005a, 2005b).

If developing countries allow trade opportunities to prevail in their agricultural sectors, then the shadow price of water allocated to these crops will rise. This rise will likely not be regionally neutral, with some areas benefiting more than others. For example, such policies will likely be more effective in farms that have access to a wider technology set. Similarly, large farms with better access to capital and information may be in a better position to gain from such policies. Small farms may need some help in the form of 4