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Total foodgrain production in Bangladesh is 32.9 million tonne of which boro rice is 18.78 million tonne. Rice is produced by using groundwater (80%). This study is to determine price and payment choice of irrigation application. Ninety six villages were selected from five divisions following multi-stage sampling. The Cobb-Douglas functional form and probit model estimate the factors of price and payment method for irrigation based on the nature of the dataset. The major determinants of water price in groundwater markets were irrigation payment system, density of tubewells, the number of water buyers, amount of remittance per household, lowland area, and fuel price. The imputed water price was the highest in crop share and this was the lowest in fixed payment system. The fixed charge system is less viable because sellers may refuse water supply at peak season, higher price of diesel, erratic electricity supply, unfriendly relation between buyers and sellers, and limited cash flow of water sellers to buy fuel. Through market-based mechanism, fixed machine charge system minimizes irrigation water use and thereby benefits water buyers, sellers, and the society at large.


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