INCOME DISTRIBUTIONAL IMPLICATIONS OF WATER POLICY DECISIONS

Intrasectoral issues have received relatively little attention in analysis of the distributional consequences of natural resource policy decisions. This paper presents a framework for such analysis and examines how intrasectoral issues can change intertemporally, focusing on water policy in agriculture. The results show that income distribution among farmers depends on the stochastic structure of production and marketing, the size distribution of farms, credit market imperfections, and risk aversion in farmer decisions. It is shown that the introduction of water conservation policies may lead to more equitable income distribution among farmers.