The Effects of Volumetric Pricing Policy on Farmers’ Water Management Institutions and Their Water Use: The Case of Water User Organization in an Irrigation System in Hubei, China

Kei Kajisa and Bin Dong

The World Bank Economic Review, 2017, vol. 31, issue 1, 220-240

Abstract: We use original water user group (WUG) data from a reservoir irrigation system in China to examine the effect of water pricing policies on farmers’ water saving behaviors. The introduction of volumetric water pricing at the group level, to replace area-based pricing, induces institutional change to prevent each member's overuse of water when the volumetric price levels are moderate. Depending on the initial conditions, the multiple pathways of change lead to new institutional arrangements, with all of them contributing to water savings. However, when the price is set high enough, many farmers exit a WUG for private irrigation. This tendency is associated with an increased probability that the remaining members do not undertake institutional change and that they do not end up saving water. This may be due to the increased management difficulties among the remaining members whose fields are separated by former members who have now opted out for private irrigation across the WUG. As a result, we do not find evidence that the reservoir water is saved at high volumetric price levels.

Keywords: institutional change; collective action; surface irrigation; social capital (search for similar items in EconPapers)
JEL-codes: O12 O17 Q25 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1093/wber/lhv034 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: The effects of volumetric pricing policy on farmers? water management institutions and their water use: the case of water user organization in an irrigation system in Hubei, China (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:wbecrv:v:31:y:2017:i:1:p:220-240.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The World Bank Economic Review is currently edited by Eric Edmonds and Nina Pavcnik

More articles in The World Bank Economic Review from World Bank Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().