Agriculture is the world’s largest consumer of freshwater, yet the economic signals governing that use are systematically broken. This project on subsidies and tariffs is building the evidence base and strategic roadmap for a paradigm shift – working to integrate repurposed subsidies and strategic water tariffs into agricultural water management to drive efficiency, equity and sustainability.
Why? The problem with broken price signals
While managing water in agriculture is one of the most pressing global challenges of our time, a critical, and largely overlooked, barrier to progress is the absence of appropriate economic signals. Current approaches to water management frequently fail to reflect water’s true value, generating distorted incentives that drive overuse and inefficiency while discouraging the investments that water security requires.
Two economic instruments sit at the heart of this failure:
- Subsidies, especially on energy, inputs or and crop prices, though intended to support farmers, frequently do the opposite: they encourage excessive water use, discourage the adoption of efficient irrigation practices erode the quality water, and mask water’s true value.
- Tariffs, where they exist at all, are often set well below the actual cost of water delivery, failing to signal water’s economic value, leaving irrigation infrastructure chronically underfunded, and starving schemes of the revenue needed for maintenance, drainage investment and long-term viability.
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