Willingness to pay for water and water rights definition: study among smallholder irrigators in Limpopo province, South Africa

Internationally there is growing understanding that water rights are important and that a lack of effective water rights systems creates major problems for the management of increasingly scarce water supplies. In South Africa the smallholder irrigation sector faces two major challenges. Firstly water use is inefficient and secondly government, which in the past invested huge amounts of money in the sector, targets improved cost recovery. Improving the definition of the water rights system can have a positive effect with regard to these challenges. At one hand improvements in the definition of water rights can stimulate smallholders to use water more productively, encouraging cooperation and investment; at the other hand an improved water rights system increases willingness to pay for water, allowing government to charge higher water prices and thus improve cost recovery. This study proposes contingent ranking to analyse the willingness to pay of smallholder irrigators for changes in the water rights system. Results indicate that smallholders are prepared to pay considerably higher water prices if these prices are connected with advancements in the water rights system. In a second step the sample population was stratified to evaluate the impact of smallholder characteristics on their willingness to pay. The groups. For example farmers suffering water shortages attach more importance to secure water supply. Policy makers can use such results to guide reforms in the design of water rights and to increase public support for interventions.