Agricultural Water Management 181 (2017) 35–46 Contents lists available at ScienceDirect Agricultural Water Management journal homepage: www.elsevier.com/locate/agwat Valuing farm access to irrigation in Nepal: A hedonic pricing model Janak Joshi ∗ , Mohammad Ali, Robert P. Berrens Department of Economics, University of New Mexico, United States a r t i c l e i n f o Article history: Received 22 April 2016 Received in revised form 29 October 2016 Accepted 20 November 2016 Keywords: Irrigation access Hedonic pricing model Social institutions Rural communities Economic value Nepal a b s t r a c t The objective of this research is to quantify the economic value of access to irrigation for agricultural lands in rural Nepal, while controlling for the effects of social institutions that can either enhance or detract from agricultural production and land values. The analysis employs the hedonic pricing method (HPM) and uses self-assessed land value data from the Nepal Living Standards Survey, 2011. For the econometric modeling, a Box-Cox transformation supports the selection of the double log HPM model. Results show that the value of land with access to irrigation water is approximately 46 percent higher than the value of non-irrigated lands with a marginal implicit price of approximately NRs. 150,840 in 2011, (representing about seven times the median rural annual per capita income). Results also show the importance of built irrigation infrastructure, such as canals and tube wells, as well as access to multiple sources of irrigation water. We find that land-owner membership in community-managed irrigation systems and forestry user groups has positive impacts on land values. In consideration of extensive 2015 earthquake damages across large areas of Nepal, the findings support the critical importance of repairing irrigation access, especially to built irrigation infrastructures, and supporting community-managed irrigation and forestry user groups, which often lack the initial capital to initiate projects, for restoring rural well-being. © 2016 Elsevier B.V. All rights reserved. 1. Introduction Access to irrigation systems is often a critical determinant of agricultural productivity and sustainability in both developed and developing countries. Attempting to understand and assess the value of access to irrigation where water is generally treated as a non-market good is important because market prices for access to the irrigation systems and facilities are often not readily available, especially in developing countries (Barton and Bergland, 2010). Even in cases when prices are available, they may not match the economic benefit of irrigation access, especially if the prices are administratively set or not derived from a functioning market. Therefore, the economic benefits of these irrigation systems are not explicitly observable. To address this issue, this analysis applies a non-market valua- tion approach known as the hedonic pricing method (HPM) (Taylor, 2003; Freeman et al., 2014). The HPM econometrically decomposes the variation in land values to isolate the value of an attribute or characteristic, such as irrigation system access or water volume (e.g., Mukherjee and Schwabe, 2015). Improved economic signals ∗ Corresponding author at: Department of Economics, University of New Mexico, Albuquerque, NM, 87131, USA. E-mail address: jjoshi@unm.edu . as to the monetary value of irrigation access or system improve- ments can inform policy actions concerning the management of scarce water resources. Using HPM modeling, the objective of this analysis is to inves- tigate the economic value of farm access to irrigation and also to different types of irrigation infrastructure in the developing coun- try context of Nepal. Given a significant body of past research (e.g., Bastakoti et al., 2010; Bastakoti and Shivakoti, 2012; Lam and Ostrom, 2010; Ostrom, 2012) illustrating the productivity of community-managed irrigation systems in Nepal, we also control for the effect of farm-owner involvement in social institutions. Community-level common property regimes have been particu- larly important governance institutions in the development and management of irrigation infrastructure in Nepal, which remain predominately gravity-based distribution systems (Bastakoti et al., 2010). The analysis uses household level data from the 2011 Nepal Living Standards Survey III (NLSS III) in the empirical HPM model. This analysis assumes that landowners are able to identify the vari- ous attributes of the agricultural lands while revealing self-assessed values of the lands. That is, the expressed land values taken from the survey are assumed to be a valid reflection of market prices. In such a scenario, the value of access to irrigation, as well as effect of farm participation in alternative community groups (as indicators of alternative institutions that help govern or influence irrigation systems), are embedded within expressed land values. http://dx.doi.org/10.1016/j.agwat.2016.11.020 0378-3774/© 2016 Elsevier B.V. All rights reserved.