Economic valuation of irrigation water in south-eastern Mexico

Abstract

Ongoing discussion on new water legislation in Mexico emphasizes the need to consider the economic dimension of water. Using the net income change method, in this article the economic value of irrigation water is estimated for banana cultivation in the state of Tabasco, which is a tropical region with high rainfall. The main results show that irrigated farms are 34–37% more profitable than rainfed ones with similar revenue levels, with corresponding water values of 1.48–1.75 USD/m3. These values are a proxy of farmers’ maximum willingness to pay, and can be used to inform tariff reform.