Governments-or, more accurately, taxpayers-are heavily subsiding irrigation, making both canal water and groundwater available to farmer at no or minimal charge. The direct subsidy to (surface water) irrigation in India, for example, is estimated at $800 million a year while the indirect subsidy (through subsidised electricity used to pump groundwater) is estimated at $4 billion a year (Bhatia, Rogers, and de Silva 1999)
The fact that water for different uses is often provided for much less than cost of providing it - or for free- leads users to give it a low value. Water provided free of charge does not get used wisely, or conserved and recycled. It does not give users incentives to conserve water. Nor does it provide sufficient revenues to operate and maintain water systems, to invest in new infrastructure, or to research new technologies. A centralised system that provided low-cost water but is not accountable or responsive to users can lead to a vicious cycle in which systems deteriorate and require more than normal rehabilitation.
Low water prices have hampered the introduction of water saving technology and contributed to overuse. It is estimated that 150-200 cubic kilometres more groundwater is pumped each year than is recharged in overexploited aquifers (Postel 1999). As a result groundwater tables are falling by up to several metres a year- with the risk of collapse of agricultural system based on groundwater irrigation in the north China plain, the U.S. high plains, and some major aquifers in India and Mexico.
For full report see " www.watervision.org "
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