ABSTRACT
Abstract This paper outlines the operational implications of the concept of water as an economic good. Four components of value of water in irrigation include: direct crop benefits to the farmer; non-irrigation benefits(e.g. drinking and bathing water for people and livestock, recharging of ground water by canals, water for micro enterprises) from irrigation infrastructure; benefits from return flows; positive economic and environmental externalities and premium for societal benefits. Costs have been defined in terms of Supply Costs which include financial costs of O&M plus capital charges. Economic Costs consist of Supply Costs plus opportunity cost of water (i.e. benefits foregone of water use in other sectors) plus negative economic externalities. Full Costs are Economic Costs adjusted for environmental externalities. The impact of raising irrigation charges to cover various components of costs have been analysed using farm-budget data from field surveys in Haryana,India.
