Full cost or "sustainability cost" pricing in irrigated agriculture.: Charging for water can be effective, but is it sufficient?

In France, the water management issue is no longer a matter of developing stakeholder participation or transferring state competence to user associations. But, as for other countries with a significant irrigated agriculture, two socio-economic questions need to be answered: (i) How to ensure the sustainability of investments by raising the price of water without discouraging economic development? (ii) How to share water between users when resources are scarce? Answering these questions brings up the two basic principles of good water management for sustainable development: as it consumes more than 70% of the available water of low flow periods, irrigated agriculture must respect the other uses by limiting its demand to the allocated volume; as it involves large and long-term public investments, irrigated agriculture must at least bear the "sustainability cost" of the irrigation schemes including the upstream water resources. Such a general answer is of course largely case-specific and should be adjusted to each institutional framework. In France today, the Societes d'Amenagement Regional (SARs) are currently applying these principles. This paper will address both socio-economic questions stated above, with a specific discussion on the case of a water-stressed basin in the south west of France where a specific step-pricing and quota system has been set up in order to regulate the demand. It is argued that "full cost pricing of water services", as recommended in the World Water Vision (The Hague 2000), is not practical in the short term and, if pursued, could lead to very undesirable results. As a conclusion, two recommendations are proposed with a view to developing best practices in charging for water. Copyright (C) 2002 John Wiley Sons, Ltd.