Egypt and Morocco differ in many aspects of agriculture and climate conditions. Even
though agriculture accounts for 80% of fresh-water use in Morocco, irrigated areas account for
16% of total cultivated area, compared with 98% in Egypt (FAO, 2004). The major crops in
Morocco’s irrigated areas are orchards, sugar beets, sugar cane, potato and wheat, whereas Egypt
has even more irrigated crops including wheat, maize, rice, sorghum, cotton, and sugar cane.
Egypt provides a case where rainfall is scarce and the nation’s farmlands are almost
entirely dependent on irrigation from the River Nile. Egyptian farmers do not have to pay for
their irrigation water, but are responsible for the maintenance of canals that are attached to their
fields. The country faces water scarcity due to increasing irrigation and industrial demand, and
the water administration is very centralized. In contrast, Morocco provides a case where water
from large scale irrigation has a water tariff, but the rates are very low and do not meet the
operation and management cost in most regions. Due to irregular rainfall patterns and increasing
use of irrigation water, it also faces a water scarcity problem. Morocco’s water administration is
currently undergoing a structural transformation from a centralized political structure towards a
decentralized system of governance.
In searching for factors that determine the behavior for irrigation water demand along
with agricultural production choices, alternative policy options for these two countries are
considered. The policy options under study are: (1) water pricing; (2) taxation on water
complementary input factors; and (3) taxation on output based on water intensity and low profit
crops.
The objectives of this research are to evaluate alternative policy options (input and output
taxes) to see if and how well they can serve as a proxy of water pricing policy in irrigated
agriculture dominated country (such as Egypt) and rain-fed agriculture dominated country (such
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