During the last decade, the concept of water demand management has received increasing attention from both academics and development agencies and banks. In the face of rising costs for supply augmentation and concerns over the apparently inefficient use of water in agriculture, managing demand appears a priority means of mitigating water scarcity problems. Economists, in particular, have used theoretical frameworks to argue for the use of "economic instruments" to provide incentives that may lead to water saving or enhancing economic efficiency. However, it has become increasingly clear to many practitioners and researchers that evidence from the field shows that the impact of economic tools has fallen short of expectations and promises. Based on an extensive review of the literature and six commissioned case studies, this document demonstrates that there are few examples in which the introduction of water pricing in irrigation schemes has successfully induced water savings. It also shows that there is often confusion over the different justifications for water pricing. (FAO Website)