Water Pricing: Balance Between Cost Recovery, Social Equity, and Crops Profitability—Tunisian Case Study

Abstract

In Tunisia, more than 90% of the total public irrigated area was transferred to water users associations (WUAs). The adoption of a participatory approach was seen as a prerequisite for efficient water use in Tunisia. However, the Ministry of Agriculture reports show that most WUAs face a critical financial situation. Low water tariff is considered the leading cause of this situation. Therefore, WUA’s managers often require an overall tariff increase to cover costs. This study seeks to know whether increasing water price is the only way to achieve the financial sustainability of WUA and to analyze the likely impact of such an increase on the profitability of principal crops and, therefore, the economic viability of farming systems. It was conducted at the level of five WUA, which manage public perimeters in the North and the Center of Tunisia. Results showed that the studied WUA has little margins to balance their budgets apart from increasing the water price at least by 10–20%. Such an increase has no significant impact on the profitability of high-value crops like vegetable and fruit trees. However, the profitability of wheat and forage crops would be severely affected. As a consequence, the economic viability of the systems based on the association of wheat, forage crops, and dairy farming will be threatened. Although necessary, the water tariff increase should be done carefully according to the type of farming systems and the social category of farmers in each region. This study suggests supporting wheat and milk output prices to stabilize farmers’ incomes.