The impact of the water rights system on smallholder irrigators' willingness to pay for water in Limpopo province, South Africa
Environment and Development Economics
Department of Agricultural Economics, Ghent University, Coupure links 653, 9000 Gent, Belgium; CIRAD, UMR G Eau, Centre for Environmental Economics and Policy in Africa (CEEPA), University of Pretoria, Pretoria 0002, South Africa; Department of Applied Biological Sciences, University of Antwerp, Groenenborgerlaan 171, 2020 Antwerpen, Belgium
Water rights are currently receiving increased attention from scholars and policymakers due to the growing understanding that ill-defined water rights impair efficient use. In South Africa, smallholder irrigation faces problems of low water use efficiency and cost recovery of government investments. This study uses contingent ranking to analyse the willingness to pay (WTP) of smallholder irrigators for changes in the water rights system. The results indicate that smallholders are prepared to pay considerably higher water prices if these are connected to improvements in the water rights system. By segmenting the population it was also shown that the importance attached to water rights dimensions varies in each segment. While lower institutional trust and lower income levels lead to a lower WTP for transferability, experiencing water shortage increases this WTP. Such information is valuable in guiding policy makers in the future design of water rights. © 2010 Cambridge University Press.