Impact of Reforming Irrigation Water Pricing in Tunisia

Abstract

This chapter examines the consequences of a 25% increase in raw water tariffs for irrigation in Tunisia using a computable general equilibrium (CGE) model. This model is intended as a methodological tool to simulate the socio-economic impact of the water management policies adopted by Tunisia, in particular the tariff policy. This approach aims to address the challenges of climate change that Tunisia, like many other countries, is facing, as well as the ever-increasing demand for water. The CGE model that the authors have developed has an essential feature in the specification of the agricultural production technology. The findings show reduction in the availability of irrigation water, which is diverted to non-agricultural uses. However, the demand for recycled wastewater is increasing significantly, highlighting its crucial future potential, especially with the planned adoption of tertiary treatment technology. The findings extend to other sectors of the Tunisian economy, particularly the agro-food industry, which is similarly affected by the strong correlation with the agricultural sector.