Financial and Economic Irrigation Net Benefit Functions for Egypt's Northern Delta

Abstract

Estimates of financial and economic net benefits to irrigation water supply are shown for a case study area in the northern Nile delta region of Egypt. Linear programming models of representative farms in the study area are formulated with particular attention to the possibilities of using less water per crop as well as shifting crops in response to hypothetical reductions in water supply. Net benefits are defined as gross revenues minus costs of production, including an imputed charge for family labor. Model solutions are based on both 1980 government prices with production controls (financial net benefits) and hypothetical 1980 international market prices with relaxed controls (economic net benefits). Five different water supply scenarios are analyzed: from the current, adequate level of supply, down to a 40% reduction from that level. Total, average, and marginal net benefit functions are reported. Implications of the differences between the financial and economic benefit functions for farmers are discussed.