Micro and Macro-Level Approaches for Assessing the Value of Irrigation Water

Abstract

Many countries are reforming their economies and setting macroeconomic policies that have direct and indirect impact on the performance of the irrigation sector. One reason for the movement toward reform in the water sector across countries is that water resources are increasingly becoming a limiting factor for many human activities. Another reason for increased pressures to address water policy issues is that many countries are in the process of removing barriers to trade, particularly in agricultural commodities. Therefore, knowledge of the value of water when crafting domestic and macroeconomic policies is important to compare the variable impacts of reform across sectors of the economy and populations within the country. Researchers have used many methods for assessing the value of irrigation water. This survey reviews a broad literature to ascertain how two basic questions have been addressed by research over the past few decades. First, what is the value of water across different sectors and levels? Second, how will this value change under different macroeconomic and domestic policies? This survey details a number of methods for approaching these two questions. The literature has been organized according to a progression from theoretical underpinnings to empirical approaches to how the value of irrigation services are relevant to the link between globalization and poverty.