To Price or not to Price? Thailand and the Stigma of 'Free Water'

Abstract

"In a context of closing river basins, where most water resources are allocated and depleted, there are strong incentives to place emphasis on water-demand management and to reform the water sector. Theoretically, water pricing has the potential not only to influence users' behaviors towards water saving, but also to contribute to reallocation of water towards more profitable crops or other uses. Pricing water is also a way to recover part of the costs incurred by irrigation infrastructure and its operation. The paper analyzes this rationale in the context of Thailand where the water used in agriculture is free. It investigates the reasons for, and the consequences of, this particular policy, and examines whether the current proposals to establish water fees can be expected to produce benefits that would offset the costs of the reform. It shows that water pricing can hardly be justified in the absence of a wider framework of institutional reform. The prospects for success of such a reform are briefly debated."