Water and Agriculture

Sustainability, Markets and Policies

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Agriculture is a major user of water and is responsible for much of its pollution. But the agricultural sector faces increasing competition for scarce water supplies from urban and industrial users and, increasingly, to sustain ecosystems.  This conference proceedings explores how both governments and the private sector can expand the role of markets to allocate water used by all sectors and to get agricultural producers to account for the pollution that their sector generates.



Japanese Water Management System from an Economic Perspective

The Agricultural Sector

Japanese water management is characterised as that of a property rights regime. Several instruments have had decisive roles in improving economic efficiencies, securing effective and equitable cost recoveries, and abating conflicts between non-agricultural sectors, under the legislative framework that prohibits explicit trading in water rights. Each LID (voluntary farmers’ group) is entitled with water rights and is responsible for the management of its irrigation water. More than the marginal cost recovery is secured and effective water use is expected at the same time. The area pricing commonly applied in the LID management is supported, taking into considerations the technical aspects and transaction costs. The LIDs, in some cases, conserve watershed areas for the purpose of stable water flow to be extracted. Facing the occasions of serious water shortage the government provides quasi-markets in water, realising intersectoral transfers between non-agricultural sectors, and among LIDs, to improve economic efficiencies. Serious water shortages take place only once every ten years on average, in limited areas and during limited periods. The community-like decision making of water allocation in the quasi-markets would help to abate the social conflicts. The permanent transfer of water rights is also managed. The Japanese systems of agricultural water management could be leading examples for developing countries in the monsoon climate, where small holdings of paddy field agriculture dominate.


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