Measuring the willingness of farmers to pay for groundwater in the highland areas of Jordan

The main objective of this paper is to estimate the willingness of farmers to pay for groundwater resources under different conditions of water supply regimes. Information available on water supplies, areas under irrigation and market conditions were the basis of the calculations. In order to identify solutions that maximize the total net income subject to resource restraints, parametric linear programming models were used to derive farmers’ willingness to pay for irrigation water. Results showed that there is potential to decrease water consumption and to reallocate it in an optimal way. Optimal reallocation increased the net agricultural income in the study area. The water demand for agriculture reacts to increasing water prices in a quite elastic manner over a long interval, whereas it reacts inelastic in the case of a decrease of the overall water supply by 15%. Farmers are willing to pay two and a half times the prevailing price of groundwater. The results show that the water values in the region are underestimated and the decision makers can impose a price level for groundwater from US$ 0.14 to 0.35/m3 without having any impact on the cropping pattern or the planted area.