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Agriculture consumes about 70% of water available in the Occupied Palestinian Territories. Domestic and industrial users utilize 30% of the water supply. Water resource managers are considering the policy of reallocating a portion of the water supply from agriculture to other uses. It is believed that increasing irrigation water prices could influence water consumption and thus make water available for non-agricultural (more economic) uses. This paper examines the impacts of water pricing on agricultural water consumption and farming profitability and provides some guidelines for policy makers regarding water pricing as a tool to manage scarce water resources. We estimate a regression model describing agricultural water consumption as a function of water prices, irrigated land area, farm income, and irrigation frequency, using data collected in a survey of about 150 farmers in the Tulkarm district. We conclude that irrigation water prices are perceived as high and comprise a large portion of total farming expenses. Therefore, attempts to increase irrigation water prices in the Tulkarm district might jeopardize farming feasibility and might have substantial impacts on agricultural water consumption. Nevertheless, many farmers would continue farming even if the water prices were increased beyond their willingness to pay threshold.
