ABSTRACT
This chapter addresses two questions: Do macroeconomic reforms affect water productivity in irrigated agriculture, and do they create an opportunity to reform water markets, thus further enhancing this productivity? Using Morocco as a focus country, we consider the case of surface water channeled from reservoirs to farmers. Since agriculture is a traded-goods sector, macroeconomic reforms are likely to increase farmer incentives to produce trade-competitive crops. Therefore, reforms are likely to affect the marginal value product of water. If farmers producing protected crops before macroeconomic reform suffer a signifi-cant loss after reform, might some or all of this loss be compensated, after reform, by giving the farmers the property rights to water so that they may earn income by renting water either out or in from others? Farmers producing crops that become more profitable after reform should have an incentive, ignoring logistical costs, to rent water from farmers producing the formerly protected crops. Is water productivity significantly enhanced so that linking these reforms might be a strategy for countries to overcome problems of growing water scarcity?
