In this article, we examine the impacts of a change in water pricing on Tunisia's agriculture sector and the rest of the economy. For this purpose, we built a computable general equilibrium (CGE) model with five production sectors : irrigated and rainfed agriculture, production and distribution of drinkable water, manufacuring and services. Three different scenarios are assessed. The first one assumes a 10% increase in the price of irrigated water. The second scenario consists of simulating a significant increase (30 %) in non-agricultural water demand by 2010. The last scenario combines the previous two. Simulation results indicate that: i)Tunisia's agricultural sector would be able to absorb, over the longer term, the effects of an increase in the price of irrigated water, ii) the government budget deficit would shrink, and iii) farm and urban households welfare would improve.
