Strategic Policy Options to Improve Irrigation Water Allocation Efficiency: Analysis on Egypt and Morocco



producers’ surplus, while the remaining sectors of economy are not taken into account. However,
if the economy were considered as a whole, reallocation of water from agriculture to other
sectors would increase global welfare because water value is higher in other sectors.

Comparisons on the measure of water demand elasticity is depicted in Figure 2. It shows
that none of the policy options are elastic. Comparatively, the output tax policy is relatively more
elastic than others. Among the input tax policies, N-fertilizer tax above 50% elicits larger
elasticities. Elasticities of N-fertilizer tax, energy tax, and output tax are comparable to
elasticities with water pricing (Pw2 and Pw3).

Revenue generated cross all policy scenarios is calculated and presented in Figure 3.
Except for the N-fertilizer tax rate of 10% (NF-10%), every policy scenario generated more
revenues than the cost recovery water pricing policy at Pw1. However, none of the policy
alternatives can generate as much revenue as the Pw3 water pricing level, which is the shadow
price obtained when water availability is only 90% of the base level.

The Case of Morocco

Characteristics and Policy Goals of the Moroccan Irrigation System

Agriculture plays a very important role in the economic and social domains of Morocco
as well. Moroccan agricultural production is characterized by rain-fed and irrigated farming.
More than 84 percent of the total arable land is dry-land farming. Cereals and vegetables are the
primary crops grown under dry-land agriculture. Irrigated farming has increased from 73,000 ha
in 1953 to 1,471,797 ha in 1998. Irrigated land contributes about 45% of agricultural value-
added, employs about 33% of rural labor, and comprises about 75% of agricultural exports
(Yacoubi and Beghiti).

15



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