Estimating the Potential Impacts of Irrigation Water Pricing Using Multicriteria Decision Making Modelling. An Application to Northern Greece D. Latinopoulos Received: 13 February 2007 / Accepted: 11 January 2008 / Published online: 28 February 2008 # Springer Science + Business Media B.V. 2008 Abstract A great challenge of the current European water policy is the implementation of volumetric water pricing in the agricultural sector, especially of Mediterranean countries, where irrigation is a necessary precondition of agricultural production and farmers’ income, but also the major consumer of water. The overall aim of the present work is to develop a methodology that will be suitable for the estimation of the potential environmental, economic and social impacts of irrigation water pricing. For this purpose, Multi-Attribute Utility Theory is implemented in order to simulate agricultural decision making at various water pricing scenarios. Water demand functions are then elicited, by means of the best crop and water allocation (farmers’ decisions) in each scenario. The European Water Framework Directive recommends that any issue concerning water resources management (including water pricing policies) should be developed at the river basin level. In this framework, a cluster analysis is performed to partition the river basin area (namely, Loudias River Basin, located in Northern Greece) into a small number of homogeneous sub-regions. The differential impact of water pricing in each region is then analyzed, and finally, an average water demand function is formulated for the whole river basin. Keywords Irrigation water pricing . Multicriteria analysis . Crop-water functions . Optimal resource allocation . Water demand . River basin management 1 Introduction Irrigated agriculture in Greece is an issue of particular national importance because it constitutes a driving force of both food productivity and agricultural income. As an immediate consequence of the climate and the socio-economic structure, water is an essential input for a profit-making agriculture, but also, for the economic viability and the social coherence of various rural areas. However, arid climate, traditional farming activities Water Resour Manage (2008) 22:1761–1782 DOI 10.1007/s11269-008-9252-x D. Latinopoulos (*) Department of Civil Engineering, Aristotle University of Thessaloniki, GR-54124 Thessaloniki, Greece e-mail: dlatino@civil.auth.gr