Is irrigation water free? A reality check in the Indo-Gangetic Basin – A working paper by the Challenge Program on Water and Food

The paper generated under the Challenge Program for Water and Food (CPWF) project explores in some depth a totally different dynamic in the irrigation economy of the vast Indo-Gangetic basin (IGB), an important exception to the global characterization. The global debate on ‘‘water as an economic good’’ presumes that irrigation water supply is delivered, controlled, and priced by public institutions. In the developing world, the price of water is kept so low that water use cost leaves farmers no incentive to use it efficiently. 

From this characterization emerges the battle cry to get the water prices right. When water prices are very low, the debate argues, tinkering with them does not result in efficiency improvements. Getting the price right may then mean raising the water price above the threshold beyond which water demand begins responding to price increases.

The paper shows that at least in South Asia, a major irrigating region of the world, this characterization needs a reality check. In the region where irrigation is viewed as an instrument to alleviate agrarian poverty, the dominant emerging trend is the opposite of what the ‘‘water-as-an-economic good’’ debate highlights. 

The paper makes the following observations:

• Public irrigation systems and their pricing policies are losing relevance to the irrigation dynamic of the Indo-Gangetic basin, including in their command areas.
• In the real irrigation economy of the IGB dominated by diesel tubewells and pervasive pump irrigation service markets, the ‘‘surrogate water price’’ facing millions of small-holder irrigators has for quite some time been well above the De Fraiture–Perry ‘‘low-threshold,’’ and is now crossing the upper threshold beyond which water demand becomes highly responsive to the ‘‘surrogate water price.’’
• Post-2000, the energy squeeze and the soaring use cost of groundwater is inducing small-holders to adapt and respond in myriad ways. At prevailing irrigation water use cost, it is found that small-holders are fostering an efficiency response, that is, shifting to water-saving crops, water and energy-saving irrigation technologies, and improved conveyance efficiency.
• But the poorest are also forced into distress responses, that is, switching to high-risk crops, reducing irrigated areas, and even getting out of farming itself. 

To download the paper click here