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| R Number: R8027 |
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| Contractor; HR Wallingford | Dates: July 2001 to June 2004 |
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To develop guidelines on irrigation water charging for governments and funding agencies, to inform policies on cost recovery, water-saving and livelihoods. |
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| Executive Summary |
| Background |
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The Dublin Declaration of 1992 called for water to be treated as an economic good. The World Water Commission (2000) recommended water services be priced to recover costs, with targeted subsidies for the poor. The Vision process's Framework for Action (FFA) suggested that the domestic water supply sector, where reforms to improve service are being widely introduced, potentially holds lessons for the Water for Food sector, where low-priced water is used inefficiently for low value crop production. DFID's draft Strategy for Water (2000) emphasises Integrated Water Resource Management (IWRM), it will "encourage understanding of the full costs (capital and recurrent) of irrigation" and "improvements (and research) in the efficiency of water use, especially for agriculture". Many developing countries, under pressure from international financing agencies, are contemplating pricing reform but they lack guidance, and there is a danger that inappropriate policies will be introduced. The research is of great relevance to the lives of poor farmers. If the price of water is increased to recover costs, or even higher in an attempt to limit demand, then without some mechanism for subsidising poor farmers there is a real danger of creating greater impoverishment.
There are three possible objectives for raising charges 1) save water 2) recover costs 3) promote pressure on the water provider for a better service. The focus of the project is on the first two. "Much is already known about the nature of successful policies and procedures for allocating water; understanding and incorporating the implications of this knowledge will avoid some potentially enormous financial, economic, environmental, and social costs. (Perry et al, 1997)". Unless a number of pre-conditions are satisfied, such are clear rights to water, increased charging is unlikely to be appropriate or effective. However, such knowledge is mainly confined to the research community: its relevance is not generally understood, whilst lessons learned and clear statements are not available to guide policy- makers. There are substantial differences in concept, design and operation between water supply schemes and irrigation canal networks. In general, the issues in irrigation are more complex, because social, institutional and technical issues are strongly inter-linked. Their performance is affected by users, who need to co-operate. Of particular importance, in open canal systems (the vast majority of developing world schemes), it is presently impractical to measure flows below the distributary canal heads, except for diagnostic purposes. Thus, charging farmers for the volume of water delivered is not at present feasible, though proxy mechanisms can be adopted. Many countries currently subsidise their agricultural sectors by charging uneconomic rates for water. Improvements in both water use efficiency and financial efficiency are badly needed, but the impacts likely to result from increase in water charges need to be carefully assessed. Briscoe, (1997) warns, "- it is essential the reform debate be informed by solid analysis -". Major institutional constraints to change still exist in many countries. The proposed research is located in three countries (Nepal, Morocco, Jordan) selected to represent smallholder agriculture in nations at different stages of development and contemplating change, in different regions, with different irrigation histories. |
| Objectives |
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Since the international funding institutions are actively supporting programmes of cost recovery in the water sector without accompanying research capacity, the research can potentially play a strategic role in influencing policies. In Nepal there are problems with appropriate water pricing in the large, government-managed schemes, since crop outputs are low. Morocco is actively considering policy options to address problems of growing water shortage.
There are two direct outputs from the project. The Review (Output 1), produced by the end of Phase 1 of the project, will analyse lessons learnt from around the world about introduction of increased pricing for particular objectives in irrigation, and also, where relevant, in water supply. General conclusions concerning the preconditions, or steps, needed to introduce successful increased pricing policies will be identified. Based on background information obtained from the three target countries, the potential for/feasibility of, introducing successful pricing policies will be analysed. If one or more countries wish to collaborate in more detailed work, a phase II to the project will be undertaken. Output 2, Guidelines on Charging in irrigation, to be produced at the end of the project, will incorporate a summary of material from Output 1, with the results of case studies to set appropriate pricing levels annexed. |
| Methodology |
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The research process will be guided by the Sustainable Livelihoods framework, and will provide feedback on the application of the concepts and principles in policy analysis. Economic, social, financial, institutional and environmental sustainability will be reviewed. Resources and constraints will be analysed to determine how livelihoods and the water resource may be affected by increased charges. The focus is primarily on areas in the developing world where water is already becoming scarce, but experience will be drawn from all regions, both developed and developing. Comparisons will be made with other sectors, principally the water supply sector, to identify common issues and differences.
The project will be undertaken in two distinct phases. The Project Steering Group, consisting of the team leader and experts in relevant disciplines from both developed and developing countries, will be set up at the start of the project. Participation by overseas members from the outset will be sought by email. Suitable experts have been identified. A sum has been allowed in the project costs for including further expertise, as found necessary. In the first phase, worldwide wide experience with charging in irrigation will be reviewed, particularly in countries like Mexico, Turkey, Philippines and Sri Lanka, and the prevailing situation in the collaborating countries will be established. The O&M costs which need to be recovered; likely and maximum financial flows to agencies; current and projected agricultural costs and prices; and revenue collection mechanisms will be assessed. Technical problems, including practical means of quantifying deliveries; charging for irrigators drawing from alternative sources; effective institutional arrangements for water management; in-built inflexibility in delivery schedules, will be analysed. The social environment in which increased charging was introduced, and the consequences for individual small farmers, will be sought. Experiences and lessons of success and failure will be sought. Contact will be made with consultants ERM, who are carrying out project R 7384 on water pricing in the WS sector, and with other organisations believed to have relevant experience in water pricing, such as IWMI. Existing contacts will be extended via the IPTRID network. Consultations with stakeholders in the target countries will follow initial review of the secondary data. Output 1 will recommend on the feasibility and likely consequences of increasing water pricing in the target countries. A joint assessment will be made with collaborating countries at the end of Phase 1 as to whether detailed case studies will provide further important material to inform policies. In such case, primary information on social, technical, financial, economic, institutional and environmental determinants will be obtained from surveys on selected pilot schemes. A primary aim will be to determine the likely effect of cost recovery charging on the livelihoods of small farm families, including women and children. Experience gained from a current DFID-funded project, R 7879, which is investigating the impacts of irrigation on rural livelihoods in Nepal and Bangladesh under the Sustainable Livelihoods framework, will be drawn upon. Methods of assessing the possible impact of increased charging on women and children will refer to R 7879. Characteristics of each of the case studies will be documented and conclusions prepared. |
| Further Information |
| Collaborating Organisations |
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CMS, Kathmandu, Nepal Jordan Valley Authority ( JVA) Ministry of Agriculture, Morocco |
| Contact Details for Further Information |
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DFID KAR WATER Dissemination Officer HR Wallingford Howbery Park Wallingford Oxon OX10 8BA
Tel: +44 (0) 1491 835381
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