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Alternative Institutions For Efficient Reallocation Of Canal Irrigation Water -- A Case Study Of Malaprabha Irrigation Project In India

Congress: 2015
Author(s): Durba Biswas, Sarbani Mukherjee
Ashoka Trust for Research in Ecology and the Environment (ATREE)1, Institute for Social and Economic Change (ISEC)2

Keyword(s): Sub-theme 9: Water allocation among competing uses and users,
AbstractAlternative institutions for efficient reallocation of canal irrigation water -- a case study of Malaprabha Irrigation Project in India

Durba Biswas and Sarbani Mukherjee

Water is a major factor constraining agricultural development, especially in a developing country such as India and there has been much discussion on how to price and allocate irrigation water in an efficient, equitable and sustainable manner (Hellegers and Perry 2004; Molle and Berkoff 2007). Presently, many irrigation systems are caught up in a 'vicious cycle' (Gulati et al., 2005: 20) where poor revenue generation from irrigation projects has led to poor investment and subsequent poor service, which leaves the farmers dissatisfied with the irrigation water supply. Farmers may express this dissatisfaction in terms of resistance to pay the water rates, leading to poor revenue generation. However, in the policy domain, there has been a categorical shift from supply-side approach (dominated largely by government decisions) towards a demand-side approach (dominated by user preferences), in order to address water scarcity (National Water Policy, 2002). However, imperfect markets or absence of markets for irrigation water in developing countries undermine its true value. As a result, policy makers find it difficult to formulate suitable pricing and other institutional reforms to meet the water requirements of farmers.

This paper examines whether the inefficiency and the scarcity issue can be addressed through redistribution of irrigation water from head-reaches (sellers) to the tail-ends (buyers) by creating appropriate institutions. Towards this end, the Contingent Valuation (CV) methodology is used to establish that the tail-enders is indeed potential "buyers" of additional irrigation water supply. This is objective is achieved by estimating the economic value of additional irrigation water through users' marginal willingness to pay (WTP) for additional rounds of irrigations. The CV survey was conducted in four villages and 227 households in the tail-end regions of Malaprabha Dam project, Karnataka, India. The survey was conducted scientifically to minimize the occurrences of biases and errors. A series of follow-up questions at the end of the CV scenario were inserted to identify biased responses. Additionally, scope test was also conducted to test the validity of the estimated CV values. The results of the CV study show that indeed, the tail-end farmers are potential buyers of additional water supply. Almost 75 percent of the respondents were WTP four times the administered water rates to secure additional irrigations. The results are consistent with similar CV studies for irrigation water emerging from developed and developing countries have categorically demonstrated that farmers can gain significant amount of benefits from improved irrigation projects and therefore, are willing to pay more for securing such benefits (Tiwari 1998; Weldesilassie et al. 2009; Mesa-Jurado et al., 2012).

Based on secondary data it is also established that the head-reach farmers are indeed "sellers" of irrigation water. Literature shows that in presence of poor monitoring, head-reaches over-extract water from canals, resulting in diminished water supply in the tail-ends. However, inefficient use of water in the head-reaches has lead to waterlogging and salination, resulting in negative welfare to the head-reach farmers. It implies that the head-reach farmers can achieve potential positive benefits by not over extracting water from the canal and letting it flow to the downstream farmers, if tail-enders are willing to pay them for doing so. Finally, the paper examines alternate institutional arrangements to achieve this win-win situation for both head-reach and tail-reach users. This paper argues that water markets designed in way which can minimize transaction cost of interaction among the buyers and sellers can provide one of the most promising institutional mechanisms for increasing efficiency of overall water use and addressing water scarcity faced in the tail-ends. 1. Gulati, A., Meinzen-Dick, R.S. and Raju, K.V. (2005). Institutional reforms in Indian irrigation. New Delhi: Sage Publications

2. Hellegers, P.J.G.J. and C.J. Perry (2004), ‘Water as an economic good in irrigated agriculture: Theory and practice’ The Hague Agricultural Economics Research Institute (LEI), Report No. 3.04.12

3. Mesa-Jurado, M. A., Martin-Ortega, J., Ruto, E., & Berbel, J. (2012). The economic value of guaranteed water supply for irrigation under scarcity conditions. Agricultural Water Management, 113, 10-18.

4. Molle, F., & Berkoff, J. (Eds.). (2007). Irrigation water pricing: the gap between theory and practice (No. 4). Cabi.

5. Tiwari, D. N. (1998). Determining economic value of irrigation water: comparison of willingness to pay and indirect valuation approaches as a measure of sustainable resource use. CSERGE GEC Working Paper. (5).

6. Weldesilassie, A.B., Frör, O., Boelee, E. and Dabbert, S. (2009). The economic value of improved wastewater irrigation: a contingent valuation study in Addis Ababa, Ethiopia. Journal of Agricultural and Resource Economics. 34 (3), 428-449.

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