There are competing demands for fresh water. Farms look to it as an irrigation source, cities rely on it for drinking water, and fisheries and fishermen depend on it for instream flow. When governments subsidize the costs of providing fresh water for irrigation in agricultural production, such subsidization can result in tiered water pricing. With tiered pricing, agricultural producers pay the government less than other water users. This tiered pricing can distort the water marketplace in a manner that can encourage wasteful irrigation practices and that can leave insufficient water instream for fisheries.

As the authors of the book Legal Control of Water Resources explained, in reference to irrigation subsidies in the United States, “[S]ubsidies have lessened water users’ fiscal incentive to conserve. There is far less reason to invest in expensive irrigation control or to line canals when you are receiving water for only a fraction of the costs.”1 This same dynamic is true outside of the United States, such as subsidized irrigation for rice-growing in India and Japan and subsidized irrigation for cotton-growing in Brazil.