INTRODUCTION AND OVERVIEW:

Poverty reduction is now one of the main goals of development yet progress against poverty stalled in many countries during the late 1990s and early 2000s. Of the 1.2 billion people defined as dollar-poor (i.e. with a per capita household income or consumption level below US$1-a-day in 1985 PPP), three-quarters live in rural areas. Reviving the fight against poverty requires action on many fronts (see IFAD, 2001), too numerous to address in one paper, but a review of the evidence of past poverty reductions suggest that one important weapon is investment in agriculture. This paper focuses on one aspect of agricultural technology: irrigation. The choice can be justified quite simply. There are huge regional differences in the proportion of cropland that is irrigated and these coincide with successes or failures in poverty reduction (see Table 1). In Africa only around three percent of cropland is irrigated and the region has experienced very little reduction in poverty in the 1990s (sub-Saharan Africa had an estimated poverty headcount of 47.7 percent in 1990 and 46.3 percent in 1998 (World Bank, 2000). In contrast, those regions that have the greatest proportion of cultivated area irrigated (namely East Asia and Pacific and North Africa and Middle East) have experienced the greatest poverty reduction. In addition, 35–40 percent of cropland in Asia is irrigated and poverty reduction in the 1970s, the period immediately following the Green Revolution in which much initial investment in irrigation was made, was substantial. We argue in this paper that this is no mere coincidence, rather that differences across regions, countries and states within countries in irrigation is an important factor in determining rates of poverty reduction. The significant poverty reduction in many parts of India for example is attributed to the availability of irrigation, which this paper aims to provide a framework for analysing the (positive and negative) impact of irrigation on poverty and to review some of the evidence of these impacts. We reach a number of conclusions about the conditions under which irrigation is most likely to have a positive impact on the poor, but we also report that evidence is patchy, and usually not gathered in such a way as to allow easy conclusions to be drawn.

Irrigation may lead to poverty reduction via increased yields, increased cropping areas and higher value crops (all favouring initially farmers, including poor small deficit and surplus farmers), by these means raises employment (directly of farm workers, indirectly of other workers if wages are bid up) and maybe cuts prices in an imperfectly open economy or if there are high transport costs. Increased mean yields can mean increased food supplies, higher calorie intakes and better nutrition levels. There are also stability effects because of reduced reliance on rainfall–hence irrigation lowers the variance of output and employment and yields, and helps to reduce adverse consequences of drought (Dhawan, 1988). However, irrigation may increase the covariance by crowding larger proportions of total output into nearby irrigated areas (because even these partly depend on rainfall and its variation) 1. All irrigation benefits (also to poor) must be offset against costs. These include not just the direct costs of irrigation projects themselves, or the costs of some of the negative impacts but also the opportunity costs of irrigation investments, i.e. opportunities foregone of cutting poverty in other ways. The Green Revolution period is “odd” in the sense that complementarities among irrigation, extension, rural roads, seed research, fertilizers etc were exceptionally high, obscuring the normal trade-offs between one type of investment and another. Perhaps, however, this very complementarity provides further justification for the need for extra investment in irrigation.

Some of the most visible and politically sensitive costs are environmental and affect the sustainability of irrigation projects: big changes to the water table, salinity, waterlogging–the latter reducible by intelligent but costly drainage planning, destruction of natural habitats all receive much press. Other costs may include widening of income and wealth disparities between dry and irrigated tracts, or between farm classes within an irrigated region, the reappearance of malaria in virulent form in irrigated areas; adverse output impact of irrigation on growth of staples such as pulses, oilseeds and coarse grains. Yet Dhawan (1988) argues that these problems are not caused by irrigation alone. Waterlogging, for example, is also caused by floods and construction of roads and railways. Before we begin to assess how irrigation affects poverty we need to consider different meanings of poverty and different types of irrigation. The impact of irrigation on poverty may vary by what we mean by poverty and how we measure it. Firstly the indicator of poverty needs to be chosen. Narrow or one-dimensional indicators include income and consumption, or calorie intake or anthropometric measures, while broader measures may include several dimensions such as access to a range of goods and services including health, education, public transport and utilities, ownership of land and other assets, political freedom and human rights. One might reasonably expect irrigation projects to impact on some of these different indicators income via higher yields, calorie intake by better food security) but access to education, or respect for political and human rights may not be affected, or only in the long-run. In addition, irrigation may have a positive impact on some dimensions of poverty but a negative impact on others. For example, irrigation may raise land prices in irrigated areas, out of reach of the landless poor or poor small farmers, but increase their incomes and employment opportunities.

Secondly poverty can be defined in absolute or relative terms, depending on how we define the poverty line or the threshold that separates the poor from the non-poor. Absolute concepts define a threshold fixed in real terms, for example an income level, that provides a given standard of living or welfare, while relative concepts adjust the threshold to reflect levels of consumption and welfare in society as a whole, which may therefore change over time as the societal level and distribution of welfare (and perceptions of what is adequate) change. Irrigation might raise incomes of the poor sufficiently to guarantee sufficient food consumption, but its ability to affect relative poverty will depend on not only whether the poor benefit directly proportionately more than the non-poor but also on the poor’s access to other inputs, assets, technology, markets and institutions.

Finally there is the time dimension of poverty to consider. Not all of the poor will be poor all year, or all their lives and there may be considerable movement in and out of poverty across seasons and across years. Irrigation may remove part of the variance of incomes across seasons and years, and so reduce the incidence of spells of poverty among those that flip in and out of poverty but it is unclear that the permanently poor will be lifted out of poverty by irrigation alone. Irrigation may take many different forms from large schemes to small systems of shallow tube-wells, from surface irrigation to small sprinkler or drip systems. Often irrigation projects have several aims, not necessarily explicitly or directly orientated towards poverty reduction dams. Perhaps more importantly however, irrigation may impact differently on the poor depending on the irrigation technology itself, their position along the distribution system (e.g.tail-enders), the institutional rules governing access to water and maintenance of water systems and their ability to complement irrigation with other agricultural inputs (which includes access to land, credit, seeds, fertilizer etc.). Furthermore, the poor are not a homogenous group of people defined uniformly by a set of characteristics. Instead they are much more heterogeneous, comprising different ages, gender, ethnicity, education, different economic activity and location.

These differences also vary across regions, countries and states within countries. Irrigation may affect different types of poor people in different ways: perhaps impacting on small farmers first by boosting yields and income levels, then impacting on landless labourers through increased demand for agricultural labourers, and then on the urban poor via lower food prices and possibly reduced migration of the rural poor to urban areas. Given these potentially large poverty impacts of irrigation across a wide range of poor people, it is alarming that investment in irrigation has been falling. Chapter 2 of this paper presents some of the evidence and possible reasons for declining investment in irrigation and examines the case for extra irrigation. Chapters 3 and 4 review the theory and evidence respectively on the links between irrigation and poverty. Chapter 5 sets out a framework for assessing the poverty impact of irrigation projects by technology type and by different groups of poor people. Chapter 6 concludes and provides a number of policy recommendations.

INVESTMENT IN IRRIGATION:

The Technical Advisory Committee of the Consultative Group on International Agricultural Research (CGIAR) estimated that the average annual value of all crop production in developing countries for the years 1987 to 1989 was US$364 billion (Yudelman, 1993; Wallingford, 1997). Of this, US$104 billion worth of crops or 28.5 percent was produced on irrigated land. About 2.4 billion people of the developing countries depend directly on irrigated agriculture for food and employment. Even though the importance of irrigation seems obvious, there has been a decline in investment in irrigation. Irrigated agriculture produces 40 percent of food and agricultural commodities from 20 percent of agricultural land. Thus, food security is critically dependent on irrigation, particularly in Asia where about 60 percent of the food production is from irrigated land. Table 2 presents the relative contribution from irrigation across regions. (World Food Summit 1996; Wallingford 1997). During the past three decades Africa’s food production has grown at the rate of two percent per year, whilst its population growth has been three percent. The number of malnourished children is expected to increase by 14 million during the next 25 years. According to IFPRI (2020 vision), given these trends sub-Saharan Africa would need to triple its import of cereals from 9 million tonnes in 1990 to 29 million tonnes in 202. One way in order to do this would be to expand irrigated area. At the sametime, however, Africa faces a water scarcity problem. Africa is a dry continent and receivesunstable rainfall. Costs of irrigation in Africa are also higher than in other parts of the world (FAO, 1986). Yet given these alarming statistics, evidence from two key sources indicates that investmentin irrigation has begun to decline. Data on irrigated areas, globally and across regions, showthat the rate of growth in irrigated area has declined, and has been accompanied by a decline inlending for irrigation by international donors (Mark and Svendsen 1993). However, linkingevidence on irrigated areas to irrigated investments is difficult as one needs to take account ofproportions of initial cropland irrigated. Diminishing returns to irrigation investment are surelyless likely if these proportions are very small to start with. Also, one needs to distinguishbetween gross and net change in irrigated area. Quite a lot of once-irrigated area becomes nonirrigated due to (a) ‘losing ground’ from agriculture to urban and other uses or loss of irrigatedland due to inadequate water management practices (Stalinization, waterlogging); (b) losingwater–falling water-tables, deteriorating management (more seepage, etc.) of irrigation systems,and increasing pressure to divert water from agriculture to urban-domestic and industrial uses;(c) possibly the effect of global warming in increasing evaporation rates (as well as increasingvariability of rainfall in the inter-tropical convergence zone). For all these and other reasonsannual gross growth of irrigated area exceeds net increase, especially in countries with much orold irrigation systems. Globally irrigated area rose at an annual average rate of 2.0 percent inthe 1960s, of 2.4 percent in the 1970s and fell to 0.9 percent in the 1980s. Regional figures, with the exception of Africa, show a similar pattern of growth of irrigated area peaking in the 1960 s and 1970s, and declining in the 1980s. In the forthcoming decades, this trend will continue, and it is expected that annual growth of irrigated land will be of the order of 0.7 percent (FAO, 2002).

There has been a large decline in real lending by major donors (World Bank, Asian Development Bank, Japanese Overseas Development Fund) for irrigation projects in South and Southeast Asia, since the late 1970s and early 1980s, when it peaked. By 1986-87 World Bank lending was only around 40 percent of peak lending, and lending by other donors shows similar trends. Trends in public expenditure on irrigation in selected Asian countries also show a decline in real irrigation expenditure in the late 1980s. Annual expenditure in China and Sri Lanka was cut by nearly 50 percent between the late 1970s and 1980s. In the Philippines the level in the late 1980s was only 1/3 of that in the early 1980s. Expenditures peaked later in Bangladesh, Indonesia and Thailand, but these countries also show a decline in investment in irrigation.

In India, public sector investment in irrigation has been stagnant or declining since the mid-1980s.

It is clear from this evidence that lending for irrigation projects and actual investment in irrigation has been declining across and within regions. The World Bank Operations Evaluation Department (OED) determined in its 1993 Irrigation Review that irrigation accounted for seven percent of Bank lending, with a peak of 10 percent during the 1970s and 1980s–more than any other single sector–but since then Bank lending for irrigation projects has declined. From 1950 to 1993, the Bank lent roughly US$31 billion (in 1991 dollars) for various forms of irrigation in 614 projects. Investment in irrigation reached a peak in the 1970s and 1980s with lending to over 250 projects in the 1970s at a total cost of US$1 120 million (1991 prices). Since then, lending for irrigation has considerably fallen. During the financial years 1995-99, there were only 39 irrigation projects with an average annual lending of US$750 million (http://wbln0018.worldbank.org/essd/essd.nsf/). This is during a period of declining lending for agriculture and rural development, which suggests that investment and lending for irrigation is not being substituted by lending for other inputs or activities. What of private sector irrigation, Typically, monitoring both use and development of private irrigation is difficult. In India and Mexico for example, two thirds of groundwater development is privately managed and is often mixed in with surface irrigation schemes, resulting in a mosaic of largely unregulated conjunctive use. In Latin America, private sector investment has historically been important and only gave ground to public sector investment during the 1970s. In Mexico, a substantial number of irrigation units covering a large proportion (around 40 percent) of irrigated area were privately owned, even before reforms of publicly-funded Preliminary review of the impact of irrigation on poverty 7 irrigation districts shifted control to water user associations (Johnson, 1997) Ringler, Rosegrant and Paisner, 2000). During the reform, increases in private sector investment in irrigation infrastructure have been dramatic, and have helped compensate for the 41 percent decline in federal government investment between 1991 and 1995 (CNA 1995; Ibid.). In many countries the trend is towards increased involvement of the private sector both in investment and management of irrigation. In Chile, with one of the most privatized irrigation sectors in Latin America, farmers have to, by law, contribute as much as 75 percent to new pumping and channel irrigation projects, with the result that only the most profitable schemes are built. The extent of private sector involvement in the approval, funding and operation, management and maintenance of irrigation projects has increased water use efficiency (see Box 1 for definitions) with booms in agricultural exports despite a small decline in irrigated area per capita (Gazmuri Schleyer, 1997; Ringler, Rosegrant and Paisner, 2000).

THE REASONS FOR THE DECLINE IN INVESTMENT:

The decline in investment in irrigation is largely ascribed to the falling economic rate of return (ERR) of irrigation projects, both new and existing making other sorts of investment better options for scarce resources. This is in part due to declining agricultural price, but it may also be because of technical reasons. Higher-return works are usually built first (e.g. the best sites have already been chosen) leaving less good ones for later, or because of rising costs of construction, or because of a better assessment of externalities, i.e. increasing negative impacts (e.g. on health and the environment). We evaluate each of these in turn. However, it must be stressed that the growth effect of investments in irrigation is only part of the story about the impact on returns to the poor, or for poverty reduction. Falling ERR may mean that the amount of total available resources declines, but distribution changes could amplify, reduce, or even reverse the effect of ERR falls on poverty. Poverty reduction impacts of projects may not come about through significant increases in yields or output alone, but through improving the distribution of access to irrigation by the poor. Hence project evaluations of poverty impacts need to evaluate not just the ERR but the impact on poverty reduction for each marginal dollar of investment. Using Indian data from 1970-93, Fan, et al. (1999:46) argue that Government spending in different investments including rural infrastructure and agricultural research and extension contributed to agricultural growth, but the effects on poverty and productivity increase differed.

M EASURING WATER USE EFFICIENCY:

Engineers usually define water -use efficiency (WUE) as “the proportion of irrigation system water that reaches the crop root zone.” It is measured by the product of conveyance Efficiency (ratio of irrigation water that reaches cropped fields to total irrigation system water) and field efficiency (ratio of water applied to the field that reaches the cropped zone to the total applied to the field) and it is a measure of the hydraulic performances of the system. The economic efficiency of water (EEW) measures the ratio of value added to output by water to the costs of obtaining it. Private EEW may differ from social EEW if the private optimum does not account for externalities, e.g. downstream farmers that benefit from the project without paying, or losses due to water pollution, salinity or flooding. Even if they both increase (by growing crops with higher returns to water), the poor do not systematically benefit, particularly where capital-intensive systems of water conservation (e.g. center-pivot systems) are applied, which render poor farmers, who cannot afford the technology, uncompetitive, and dislodge poor workers. Where there exist large differences in WUE and there is knowledge of any under-performance, mismanagement or corruption, WUE is likely to be a useful indicator of EEW and equity, and therefore of possible welfare implications for poor people markedly. Investment in rural infrastructure and agricultural research and extension were definite ‘win-win’ situations, and had the highest impact on productivity and output. However, investment in irrigation had only the third largest impact on agricultural productivity, and a smaller impact on rural poverty reduction. But these rankings of investment types, and the returns to each type, differ hugely among regions. Fan et al. (1999) show that some rainfed or “backward” regions show higher ERR and higher poverty impact per marginal dollar for a wide range of types of investment than already advanced irrigated areas. Furthermore, even if it is found that in some countries or regions ne works have lower economic returns than other projects, investment in new works may have higher poverty impacts than other investments. Finally, while it may be the case that marginal physical returns from old works are falling (as irrigated area from a particular works expands or for ecological or management reasons as time passes), rehabilitation of existing irrigation systems may have higher ERR than either new irrigation or other types of investment. Carruthers (1996) argues that the returns to irrigation are comparable to alternative investments in agriculture and non-agricultural projects. In an evaluation of 192 World Bank-funded irrigation projects implemented between 1950 and 1993, 67 percent received an overall satisfactory rating with an average internal rate of return (IRR) of 15 percent at evaluation (as opposed to appraisal or completion). This average is quite high given the large initial investments required in irrigation projects, the long gestation periods before benefits start trickling in and accounting for inflation. Moreover, this was achieved in a period when the domestic terms of trade, due to overvalued exchange rates, and various indirect taxes or subsidies to competing urban interests, worked against the agricultural sector. When irrigation projects were weighted by area served, the average evaluation IRR increased to 25 percent. Hence the decline in investment in irrigation should not be ascribed to a real decline in the rate of return to such investments.

There was no downtrend in ERR to agricultural research in the 1980s or early 1990s as compared with 1960s and 1970s–despite exhaustion of new Green Revolution uptrends on basic yields. There is no reason why irrigation investments are any different. The relativelyconstant ERR is despite falling world agricultural prices (about 0.5 percent per year relative tomanufactures) and should carry through to, and parallel results for, trends in returns to irrigation.Construction costsThere is an argument that investment in irrigation is falling because of rising costs of construction.

This may well be the case in some areas (see Table 3). In India and Indonesia, the real costs of new irrigation have more than doubled since the late 1960s and early 1970s; in the Philippines real costs increased by more than 50 percent; in Thailand by 40 percent, and in Sri Lanka, costs tripled. The result is lower returns to investment. This has been shown by Aluwihare and Kikuchi (1991) for Sri Lanka where the benefit cost ratio for new construction declined from 2.1 in 1970-74 to 0.7 in 1985-89. But these data relate to countries where irrigation has long been intense. In other regions, costs of construction are falling, and so invalidating some of the old arguments against irrigation expansion.

COST RECOVERY:

Poor cost recovery could be another factor that explains declining trends in irrigation investment.

Public irrigation projects have been an enormous drain on government budgets, mainly because cost recovery falls short of covering the actual costs (Johnson, 1990). For example, in Pakistan in 1984 approximately Rs 1 billion were collected in payment for public irrigation services. Operation and Maintenance costs were about Rs 2 billion and annualized charges for past irrigation investments were Rs 5.9 billion. Small et al (1986) studied cost recovery for five South and Southeast Asian countries (Indonesia, Korea, Nepal, Philippines, and Thailand) and found that actual government receipts covered less than 10 percent of the full irrigation costs. Increased pressure to recover costs or to reduce subsidies may also make irrigation projects less attractive other things being equal, but presumably cost recovery problems will affect all public investments.

PRICE OF AGRICULTURE:

The biggest surge in investment in irrigation occurred in the 1970s, leading some to argue that this was due to the rise in agricultural prices, due in turn to the two oil crises raising prices of inputs and transport and unfavorable weather conditions, and to argue further that declines in agricultural prices make future investment in irrigation unwarranted (Repetto, 1986). If these events were perceived to be significant and likely to extend into the long-run, then this argument may have some merit. It is possible however that falling agricultural prices now are a consequence of rising irrigated area and hence higher global yields, and even more if extra irrigation creates incentives for green revolutions in seed-fertilizer use, and if these eventually raise yields (more accurately, net value added) more slowly than they depress farm prices (more accurately, farm output prices relative to farm input prices–fertilizer prices may be bid up, as well as crop prices down). However, even if agricultural prices continue their downward trend, there is sufficient evidence that ERR can be maintained at acceptable levels.

TECHNICAL EFFECIENCY:

Another possible reason behind declining investments in irrigation is decline in other aspects of irrigation performance. Disincentives, such as poorly targeted subsidies, or inappropriate water pricing systems can induce overuse or wastage of water (IFAD, 2001). Inefficient irrigation is cited as one of the main reasons for low returns to investment in Latin America. With the possible exception of Chile, where water use efficiency has improved due to the establishment of water markets and tradable water rights, and where cost recovery is very high, inefficient irrigation damages the performance of projects. Estimates from Brazil found excess irrigation time, pipe leakage and surface runoff to be the main culprits. Exogenous factors, such as global warming that increases irrigation water requirements, may also have affected technical aspects of projects.

HEALTH AND ENVIRONMENT IMPORTANT:

Declining ERR of investments in irrigation may be due to either increased negative impacts of irrigation or increased value being ascribed to such costs. It is certain that there has been more vocal and visible concern over the social and environmental impacts of irrigation projects, particularly but not exclusively large-scale irrigation projects. Negative environmental effects that are difficult to identify let alone value, create adverse publicity and weakens political support for such projects, despite the fact that, even with adequate compensation systems, benefits may still outweigh costs. The World Bank in its study of 50 large dams estimated that only 26 percent of the 50 projects had an unacceptable social and environmental impact that could not be mitigated without jeopardizing the economic returns to the projects. The remainder of the projects could still make adequate compensation or investments in technology to avoid associated environmental effects and have acceptable ERR (World Bank, 1996).

THE EFFECTS OF IRRIGATION ONPOVERTY: A FRAMEWORK FOR ANALYSIS:

Why is the decline in investment in irrigation important for poverty reduction? While the answer may be obvious to some given the importance of water as an input in agricultural and other productive processes, in reality the channels that transmit effects of irrigation through to poor households are many and complex. This section lays out a conceptual framework for analyzing the transmission mechanisms between irrigation and poverty, whilst the following section reviews some of the country and regional evidence that sheds light on the relative importance of different channels. We attempt to examine how the size of different effects of irrigation on the transmission mechanisms to poverty varies by characteristics of the irrigation project, such as type, scale, water source, and management and maintenance mechanisms of irrigation projects.

THEIMPACTSOFIRRIGATIONONPOVERTYVIAOUTPUT, EMPLOYMENTANDPRICES:

We begin to identify the impact of irrigation by considering a partial equilibrium scenario with a hypothetical, unspecified irrigation project in one location and farmers producing one farm product, for example a staple grain, and then consider secondary, general equilibrium effects by allowing for multiple farm products. The first direct impact is on output levels. Irrigation boosts total farm output and hence, with unchanged prices, raises farm incomes. Increased output levels may arise for any of at least three reasons. Firstly, irrigation improves yields through reduced crop loss due to erratic, unreliable or insufficient rainwater supply. Secondly, irrigation allows for the possibility of multiple-cropping, and so an increase in annual output. Thirdly, irrigation allows a greater area of land to be used for crops in areas where rain fed production is impossible or marginal. Hence irrigation is likely to boost output and income levels. If there is no price effect (i.e. through higher output levels) and no effect on employment or stability of food availability, only “small farmers” among the poor–or more precisely only the own-farm incomes of the poor–are affected by this. If the output effect is the only effect that irrigation has then its poverty impact will be limited, given that labour income is a growing part of poor’s income, and labourers are growing share of the poor. Finally, output may be increased because irrigation enables the use of complimentary inputs, such as high yielding varieties (HYVs). In fact, during the Green Revolution, there was an initial emphasis on using HYVs on better-watered areas, and on wheat and rice regions, which tended to leave out the poorer areas. HYVs (and irrigation complements the use of HYVs) increased surpluses so that the prices of cereals were lower than what they would otherwise have been. In the areas that gained from the use of HYVs the decline in prices was outweighed by an increase in yields, but in areas that did not benefit from HYVs, the restraint on cereals prices harmed farm sales and there was little or no yield compensation (Lipton and Longhurst, 1989). Thus, incomes reduced in these areas. The landless and the food deficit farmers gained through a decline in the cost of food purchases. Lipton and Longhurst (1989) argue that the problem of ‘regions left out’ should not be over-generalized for the following reasons:

1 In some cases such as India and West Malaysia, inequality among rural areas is associated with only a small proportion of either poverty or national inequality (Malone, 1974 and Anand, 1984; Lipton and Longhurst, 1989:16);

2 In other cases, some of the regional bias in benefits from HYV research corrects earlier research biases towards regions suitable for major export crops, especially within West Africa;

3 To some extent, migration from non-HYV areas to HYV areas could reduce the bias;

4 Finally, net food buyers would gain in any case in all regions. Regional income distribution has actually improved in some countries. In Taiwan, most of the cropland is in irrigable HYV rice so that there has been an improvement in regional income distribution. In Pakistan, 40 percent of the cropland is in irrigated wheat and there has also been a spread of HYVs to rain fed and barani areas (Rochin, 1973; Lipton and Longhurst 1989). This helped in reducing inequality among rural regions in Pakistan (Chaudhry, 1982; Ibid.). In India (excluding the Eastern rice states and Kerala) HYVs did not increase inter-district inequality.

Binswanger and Quizon (1986) use a general equilibrium model of India’s agricultural post- Green Revolution sector to consider the effect of expanding the irrigated area by 10 percent on the rural poor. The effect is to increase aggregate output by 2.7 percent and decrease the aggregate price level by 5.8 percent. Since irrigation requires labour, labour employment and real wages rise slightly. But this labour demand effect on irrigation is not very strong due to the inelastic final demand, which curtails output. Residual farm profits therefore decline by 4.8 percent due to higher labour costs and lower output prices associated with domestic absorption. Incomes of the landless are predicted to rise modestly from this (2.9 percent), whilst large farmers lose (-0.7 percent). All urban households gain substantially with the poorest showing the largest gain (6 percent).

The second direct effect on poverty is via employment:

There are two sources of additional demand for labour created by irrigation projects. Irrigation projects firstly require labour for construction and on-going maintenance of canals, wells and pumps etc. This is likely to be an important sector of employment for the poor, especially the landless rural poor or rural households with excess labour or seasonal excess labour. Secondly, increased farm output as a result of irrigation will stimulate demand for farm labour both within the main cropping season and across new cropping seasons, increasing both numbers of workers required and length of employment period. Rural poverty levels may therefore be reduced by increased employment opportunities. In addition, there may be effects that extend to other areas if irrigation projects reduce migration to urban areas, and so reduce the pool of job-seekers and relieve the downward pressure on urban wages and the upward pressure on prices of housing and other urban infrastructure.

CONCLUSIONS:

Irrigation affects poverty via a variety of different transmission effects that vary by technology type and by the characteristics of different types of poor. The chief effects are via increased employment and lower food prices: most of the poor (even the rural poor) gain an increasing share of their income from employment and are net food purchasers. As well as raising mean levels of employment, output and incomes, irrigation can also help reduce the variance of each, although there may be increased covariance. However, the distribution of ownership of and benefit from water and water-yielding assets, e.g. between large and small farms, is an important issue. As some of the studies above have suggested, increases in mean yields, output and incomes are not always replicated across the distribution of farms. Although few project evaluations explicitly address the equity issue of irrigation projects it is possible to draw a number of tentative conclusions.

Study concludes that irrigation in itself is an important tool in poverty reduction. It is no coincidence that regions with the best poverty reduction performance have greater proportions of irrigated land that has complemented advances in other areas of agricultural production. There are important potential benefits of irrigation through increased yields, higher and more stable outputs, lower consumer prices and greater demand for labour, that arise solely through the adoption of irrigation but can be magnified when used in combination with other inputs. However, the poverty reduction impact of irrigation is not a foregone conclusion, and much depends on the detail. First of all technology matters. Small scale, low cost and labour-intensive irrigation techniques are likely to be more important for poverty reduction. Irrigation techniques that can be accessed by small, capital or credit constrained farms, that use additional labour beyond the initial construction phase (either family labour or generate demand for hired labour) are more likely to be of benefit to the poor than large scale, capital intensive technologies. But this may not be appropriate for all regions. Substantial poverty reduction in sub-Saharan Asia is unlikely to be achieved without some new small and large scale irrigation projects. The high costs of this, combined with future increasing pressures on water use (e.g. subsidised agriculture water use, growing domestic and industrial use) will see big shifts of costly intensive irrigation, from cereals and staples to high-value crops. This requires more water control in semi-arid areas, and lower-cost irrigated areas, for staples production and employment.Secondly, institutions matter. In areas of extreme land inequality in Asian countries, irrigation inequality is even more extreme. Giant farmers have secured free water for capital-intensive use, leaving almost no water control for the labour-intensive small-farm poor. Poverty reduction demands attention to this issue. Distribution issues are central to assessing the poverty impact of irrigation. Small users and those in tail-ends of systems need to be able to secure access to water in the appropriate quantities and at the appropriate times. Water markets and water pricing may be methods of ensuring equitable access, as well as transparent, accountable decision making institutions. Studies of successes and failures of irrigation in Sub-continents show that a combination of supply augmentation and demand management will be required. Effective demand management will require water resources policies involving in part, cost recovery, transfer of management responsibility, and institutional change. Both the infrastructure as well as farmer experience to exploit this potential is currently missing in some countries like Pakistan, bangla, etc.

Finally, the negative externalities of irrigation–on agriculture and the poverty environment–may be locally very damaging, with variable impacts on the poor. This conclusion, showing the variety of possible situations, calls for a special attention in developing irrigation projects. In a ‘pro-poor’ approach to irrigation development, a careful review of all possible impacts on the poors should help enhance the positive impacts on agriculture income and mitigate to possible negative impacts on formers poverty of Asian countries.

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Received on 24.03.2018 Modified on 20.04.2018

Asian Journal of Management. 2018; 9(3):1109-1116.

DOI: 10.5958/2321-5763.2018.00177.4