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Water theft carried out by manipulating water meters constrains the implementation of water-saving technologies, which themselves affect the incentives for theft. Using a theoretical model of centralized management, we show that theft is more likely when water prices and monitoring costs are high and punishment levels are weak. Adoption of water-saving technologies is more likely when monitoring costs are low and water prices are high, though only within the range of low to medium prices. The basic analysis is extended to allow for collusion between cheating farmers and the monitor. In the model, we show that collusion is more likely when punishments are weak. We test the model predictions, using data from Tunisia for the years 2012–18, relying on instruments that proxy for unobservable monitoring costs. We use the inverse probability weighting (IPW) method to correct for the potential bias arising from non-random sample selection. Although the econometric evidence supports the majority of the theoretical findings, various economic, socioeconomic, physical, and geographical factors can counteract or supplement these effects.

Adoption of modern irrigation technologies in the presence of water theft and corruption: evidence from public irrigated areas in Medjez-el-Bab