Water allocation, irrigation efficiency, rationing and pricing in Israel: what can we learn?

Chris Perry is a water researcher who worked for the World Bank. These are his field notes after a visit to Israel in 2015 on how to learn to manage a nation’s water using the Israeli model.

Israel is rightly and widely perceived as a leader in water resources management and in the design and adoption of “hi tech” irrigation equipment.  Crop yields, the value of production per hectare and productivity per cubic meter of water are all high by international levels, in a context of exceptional water scarcity.

The Israeli experience is often proposed as a model for other countries facing water scarcity.  Most particularly “hi tech” irrigation technology (drip, micro sprinklers, sub-surface drip) is seen as a basis for reducing agricultural water use to sustainable levels.

Volumetrically priced water, which Israel has adopted, is also often recommended to encourage avoidance of waste, reduce demand, and achieve better allocation of water among competing users inside and outside the agricultural sector.

Deriving maximum economic benefit from scarce water resources, and reducing demand to sustainable levels, are explicit policy priorities for many countries, so an understanding Israel’s experience is an important contribution to those objectives.

That said, the institutional and regulatory context, historical pattern of use and hydrogeology within which irrigation has developed in Israel are fundamental considerations for the wider applicability of hi tech irrigation, and also to the relevance of water pricing as a demand management mechanism.

Institutional and Regulatory Context

Nana Estate winery in Israel
Nana Estate vineyard in Israel. Dry season

Irrigated agriculture developed in Israel under the exceptional circumstances of building a State in a hostile environment. The State was powerful, respected and generally inclined towards centralised management. Two key features that emerged from the earliest days were that water resources are owned by the state, can only be used with a licence—with all use metered. Second, all land is owned by the state, and the area permitted to be irrigated and its allocated water supply are authorised by the state.  A farm is thus legally defined in terms of its irrigable area, and its “normal” water allocation.

Water is allocated on the basis of an annually authorised volume per hectare, specified in relation to the “normal” allocation for an average year.  Thus is a dry year, authorised volume may be 80% of the normal allocation, and in a wet year the authorised volume might exceed the normal allocation.  More broadly, allocations are varied to reflect trends in water availability (aquifer and surface storage conditions).

Water tariffs (the price per cubic meter delivered to the farm) are fixed for three “blocks”.  The annually authorised allocation sets the basis for the volume to be supplied in each block: 70% of that volume is available at a relatively low price; the remaining 30% at a premium of 20%. Any additional water that the farmer uses is charged at a high, penalty rate.  The tariffs also vary somewhat depending on water quality, encouraging the use of recycled wastewater. This means that farmers are free to use as much water as they choose (including growing highly water-intensive crops), but face a strong financial incentive to use water wisely.

Water demand is thus influenced (but not limited) by the increasing tariffs applied to higher demands, which in turn are designed to result in a “target” level of demand related to the annually available supply.

Volumetric water pricing certainly has a strong role in this scenario, but is several steps removed from a simple market-clearing price, or an estimated constant price designed to balance supply and demand while allowing farmers to profit from irrigation. Most importantly, the role of pricing depends entirely on the national Water Authority’s power to set annual allocations, fix the price in relation to that target, measure water delivery, and charge in accordance with actual use.  The national Water Authority is, since 2006, an independent agency, minimising political interference that inhibited timely response to crises in the 1970s, 80s and 90s.

Historical pattern of use in Israel

For many years, water allocations to agriculture increased, as infrastructure was developed to serve new areas and exploit the country’s natural runoff and recharge—most importantly through the national water carrier, abstraction from internal rivers, and development of the mountain and coastal aquifers. After about 1968 allocations gradually stabilised, and in the following years, allocations of fresh water to agriculture were reduced—partly due to some severe droughts, and partly reflecting the increased demands for water from other sectors, including the need to reverse the environmental impacts of water resources development.  Despite this, agriculture production continued to grow.

Israel's agricultural water consumption over time
Israel’s agricultural water consumption over time

Two separate factors explain this achievement—as reflected in the graph above.  First, the continuous improvement in irrigation technologies and their widespread adoption resulted in an increase in on-farm irrigation “efficiency”—better described as an increase in the proportion of water supplied to the farmer that is converted into productive crop ET.  Well-managed flood irrigation typically has an efficiency of 50-55% (that is, roughly half of the water is converted to crop consumption) while advanced drip and sprinkler technology will easily exceed 80% even allowing for flushing of salts.  Thus, the supply of water for crop consumption was effectively increased by about 50% over the period that technology was transformed from flood to drip and other hi tech approaches.  In fact, freshwater supplies in the last decade or so have actually decreased and have been replaced by treated wastewater, illustrated above in the divergence between total allocations to agriculture and the fresh water (i.e. naturally occurring water from rainfall, percolating to aquifers or running off into streams).

It is a the paradoxical fact, discussed more below, that while freshwater allocations to agriculture declined, crop water consumption in the sector probably increased.

Hydrogeological context

Much of Israel’s irrigated agriculture is in arid areas with no usable aquifers, so that excess irrigation application was lost to evaporation or unretrievable percolation to saline or brackish aquifers.

Towns and cities disposed of their effluent either into rivers that discharged into the sea, or through local treatment plants that released partially treated effluent to the local environment.  More recently, and particularly as non-agricultural water use has become a major component of demand, the potential to treat and recycle urban wastewater has been exploited and has provided a major new “source” of water for agriculture.  The construction of large-scale desalinisation plants in the last ten years has vastly increased the basic availability of water to the country (600MCM in a total demand of 2,000BCM—an increase in the national water supply of almost 50%) allowing release of freshwater to environmental restoration, and increased supply to urban use.  Agriculture in turn has benefited from substantial recycling of the increased supplies to urban areas, which is treated and recycled as wastewater.

What is special about Israel and water use?

Israel’s achievements in the irrigated agricultural sector are remarkable, and appear to have gone through the “usual” cycle of water resources development, expansion of agriculture, over-exploitation of aquifers and rivers (resulting in declining water levels, pollution and environmental degradation) and now emerging into a more unusual scenario where incremental supplies from desalinisation are affordable to augment urban supplies, while  re-use of the consequent wastewater is an affordable source for productive, hi tech irrigation.  This indeed is special.

Several components of this achievement are perhaps unique to Israel, and are preconditions for the model to work:

  • control of surface and groundwater resources
  • control over the irrigated area
  • measured delivery to the farm level
  • price incentives (or rationing) at levels sufficient to limit demand

This combination of factors had two separate implications: first, allocations of water have been limited to ensure “sustainability”—long term stability of aquifers and surface storage.  Second, since every farmer is short of water, every farmer is a researcher into water productivity, and in consequence almost all farmers have adopted hi-tech irrigation to maximise the productivity of the scarce water resource.

The conventional wisdom is that Israel lives within its water means because it has adopted hi-tech irrigation.  The truth is the reverse: Israeli farmers have adopted hi-tech irrigation because every one of them is water-short and needs to maximise production per unit of water available to them—so they have adopted hi tech irrigation.

This is not a trivial insight.  Worldwide, hi-tech irrigation is being promoted, subsidised and adopted on the assumption that this will automatically lead to lower demand for water (especially groundwater) despite the absence of controls over access to water.

All the evidence (and indeed hydrological and economic logic) point in the opposite direction: hi-tech irrigation results in a higher proportion of the water delivered to the farm being consumed through ET.  Return flows that recharge aquifers or run off back to streams are reduced, potentially harming other users.  This is the hydrological impact. Furthermore, because water delivered to the farm is more valuable, farmers can afford to pump longer from deeper to acquire more water.  This is the economic impact.

In the absence of the four pre-requisites set out above, promotion of hi-tech irrigation is resulting in the depletion of aquifers across the world, and enhanced competition for surface supplies.  This is a vicious circle, widely observed and largely unaddressed:  the politics of reducing water allocations, monitoring use and either rationing or charging demand-limiting prices for water are contentious. The engineering implications of monitoring water supplies to individual farmers in most systems are extraordinarily challenging (and expensive).

If these challenges are met—water allocations are set, monitored and enforced, supported by simple rationing or demand-limiting price structures—there is a potential virtuous circle, exemplified by Israel’s water history, of environmental stability, farmer-led adoption of innovations that maximise the productivity of water, and a vibrant agricultural sector that can afford to pay for water services from traditional and non-traditional sources.

The alternative scenario of continuous environmental deterioration, a literal race to the bottom of aquifers (often pumping subsidised water to grow low value crops) will eventually be curtailed by nature as the water—for all users, not just profligate irrigators—runs out. (See Morocco aquifers).

It happens, and not just in less developed countries.  While farmers in California are pumping groundwater to grow alfalfa to feed cows in Saudi Arabia, some townships are unable to pump water from the wells that used to supply drinking water.

(An earlier draft of this article benefited from comments from Michael Gilmont)

About the author

Chris Perry is an independent water researcher and economist particularly interested in water accounting, the impact of irrigation technology on the demand for, and consumption of water. He worked for the World Bank for more than 20 years, and was subsequently head of research at the International Water Management Institute.  
Chris Perry

Chris Perry is an independent water researcher and economist particularly interested in water accounting, the impact of irrigation technology on the demand for, and consumption of water. He worked for the World Bank for more than 20 years, and was subsequently head of research at the International Water Management Institute. Perry wasthe Deputy Director General of the International Water Management Institute, and after retiring was an Editor in Chief of Agricultural Water Management. 

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