ANALYSIS
An economic model of waterlogging and salinization in arid
regions
Dennis Wichelns *
Department of En6ironmental and Natural Resource Economics,Uni6ersity of Rhode Island,Kingston,Kingston,RI02881,USA
Received 24 July 1998; received in revised form 24 February 1999; accepted 3 March 1999
Abstract
Waterlogging and salinization arise in arid areas largely because two essential resources, irrigation water and the assimilative capacity of unconfined aquifers, are not priced or allocated correctly to reflect scarcity values and opportunity costs. Farm-level and project-level models of crop production are examined to identify policies that will encourage farmers to consider opportunity costs and the effects of irrigation and leaching on depth to regional water tables. Appropriate policies include volumetric water pricing, water markets, tradable water allotments, adjustments in area-based cost recovery programs, and incentives for farmers to use irrigation methods that reduce deep percolation. Implementing appropriate versions of these policies may reduce the rate of increase in waterlogged and saline areas. © 1999 Elsevier Science B.V. All rights reserved.
Keywords:Drainage; Economics; Irrigation; Policy alternatives; Salinization; Waterlogging
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1. Introduction
Waterlogging and salinization, known by some as the ‘twin menace’ of irrigated agriculture, have reduced productivity in arid regions since the rise and fall of Mesopotamia (Jacobsen and Adams, 1958). Currently, these problems affect many of the world’s large-scale irrigation systems,
impos-ing farm-level and public costs in the form of lost production and efforts to reduce the rate of in-crease in affected areas (Kovda, 1983; Ghassemi et al., 1995; UNEP, 1997).
Waterlogged and saline soils are found natu-rally in many regions, but inappropriate irrigation also causes these problems, resulting in economic losses when crop yields are reduced by high water tables and soil salinity (Szabolcs, 1987; Rhoades, 1990; Smedema, 1990; Dregne, 1991; Scherr and Yadav, 1996; Abdel-Dayem, 1997). The areal ex-tent of the problem is increasing worldwide,
pri-* Corresponding author. Tel.: +1-401-8744565; fax: + 1-401-7824766.
E-mail address:dw@.uri.edu (D. Wichelns)
marily as a result of the rapid expansion of irri-gated area since 1950 (Kovda, 1980, pp. 179 – 188; Barrow, 1991; Szabolcs, 1992; World Bank, 1992; UNEP, 1997).
The primary irrigation-induced causes include leakage from poorly lined canals and reservoirs, excessive water application, and inadequate drainage of agricultural land (Barrow, 1991; Scott, 1993). Seepage from irrigation facilities and deep percolation from farm fields enter un-confined aquifers that often are saline. When a water table rises within 2 m of the soil surface, the root zone available to plants becomes restricted, salts rise to the surface by capillary action, and the resulting salinization can render land unsuit-able for agriculture (Stone, 1984 p. 141; Arnon, 1987 p. 147; Abernethy and Kijne, 1993; Abrol and Sehgal, 1994; Hillel, 1994 p. 56; Kijne et al., 1998).
Some deep percolation is required in arid areas to remove salts from the root zone and sustain productivity over time (Oster, 1984; Hoffman, 1990; Rhoades and Loveday, 1990). However, actual leaching fractions often exceed leaching requirements because the farm-level costs of irri-gation rise with efforts to achieve precise, uniform application of water (Letey et al., 1990; Dinar and Zilberman, 1991; Upton, 1996 p. 193) and many water allocation and pricing policies do not moti-vate efficient use (Abrol et al., 1988 p. 113; Prasad and Rao, 1991; Sampath, 1992; Meinzen-Dick and Mendoza, 1996; Rosegrant and Meinzen-Dick, 1996). Rotational water delivery systems, which are common in much of the world, lead to excessive deep percolation because farmers irri-gate according to fixed schedules that do not match crop water requirements (Dhawan, 1989; Qureshi et al., 1994). In many systems, water prices are too low to encourage farm-level im-provements in water management or to justify investments in irrigation methods that minimize deep percolation (Hillel, 1994 p. 217; Mageed, 1994).
This paper examines the economic causes of waterlogging and salinization in arid regions, to determine if economic incentives can be imple-mented to reduce the rate of increase in water-logged and saline areas. Farm-level and
project-level models of crop production are exam-ined to identify policies that might encourage farmers to consider the effects of irrigation and leaching activities on depth to regional water tables.
1.1. Extent of the problem
The World Bank (1992, p. 57), states that salin-ization caused by inappropriate irrigation prac-tices affects about 60 million ha, or 24% of all irrigated land. Severe declines in productivity are observed on about 24 million ha, or 10% of irrigated land. Umali (1993) reports that saliniza-tion affects 28% of irrigated lands in the US, 23% in China, 21% in Pakistan, 11% in India, and 10% in Mexico. Barghouti and Le Moigne (1991) sug-gest that the area affected by salinity, worldwide, is increasing at the rate of 1.0 – 1.5 million ha per year. Despite several decades of land reclamation efforts, new irrigated areas are being degraded faster than older soils are being reclaimed (World Bank, 1992, p. 57).
Estimates of problem areas in India range from 3.4 to 6.0 million ha (Dwivedi, 1994; Dhawan, 1995 p. 112). Large seepage losses, over-irrigation, and extensive production of crops with large wa-ter requirements have caused a steady rise of the water table in the command area of many Indian irrigation systems (Swaminathan, 1980; Reddy, 1991). The primary causes of the problem in India are the absence of economic incentives for farmers to conserve water, and over-irrigation (Joshi, 1987; Chopra, 1989; Joshi and Jha, 1991; Mitra, 1996; Saleth, 1996 p. 27). Singh and Singh (1995) report that rice, wheat, and cotton yields are reduced by 10 – 40% on waterlogged and saline soils in the Northwestern state of Haryana.
Mustafa and Pingali, 1995; Faruqee, 1996; Smets et al., 1997). Inappropriate water allocation and pricing policies also contribute to the increase in affected areas (Ahmad and Kutcher, 1992; Lenton, 1994; Kemal et al., 1995a).
Irrigation in Central Asia has been sustained by large diversions of water from the Amu Dar’ya and Syr Dar’ya Rivers, reducing the volume of fresh water reaching the Aral Sea and causing extensive secondary salinization of agricultural lands (Micklin 1988; Kotlyakov, 1991; Micklin 1991; Levintanus, 1992; Micklin 1992; Glantz et al., 1993; Kharin et al., 1993; Saiko, 1995; Kharin, 1997; Spoor, 1998). In Egypt, construction of the Aswan High Dam in the 1960s enabled farmers in the Nile Valley and Delta to convert from basin to perennial irrigation, causing a rapid rise in shallow water tables and increasing soil salinity (Abul-Ata, 1977; Kinawy, 1977; Kishk, 1986; White, 1988; Scott, 1993). Within 20 years of the start of Aswan operations, waterlogging and salinization had affected 28% of farmland in Egypt and average yields in those areas had fallen by 30% (Speece and Wilkinson, 1982).
Ren (1992) and You (1992) describe the rapid increase in problem areas on the North China Plain during the late 1950s and early 1960s, when large volumes of irrigation water were diverted from the Yellow River. The area with saline soils increased from 1.5 to 2.0 million ha before 1958 to more than 4.1 million ha in 1961, or about 22% of the total cultivated area. Dregne et al. (1996) and Xiong et al. (1996) report that 40% of irri-gated land on the Ningxia Plain in north China is affected by salinity, where high water tables are caused by excessive irrigation and canal seepage.
1.2. Potential role of economic incenti6es
Public programs to reduce the extent of prob-lem areas include construction of regional drainage systems (Amer, 1996), operation of pub-lic tubewells (Chaudhry and Young, 1990; Afzal, 1996), and farm-level incentives to reduce deep percolation by improving irrigation methods (Wichelns, 1991; Wichelns et al., 1996). Subsur-face and open-ditch drainage systems will remove saline drainage water from an irrigated area, but
these systems are expensive (Kelleners and Chaudhry, 1998) and regional coordination is re-quired in areas with many small farms (Datta and Joshi, 1993). In addition, environmental issues can arise regarding the discharge of drainage wa-ter into rivers or lakes (National Research Coun-cil, 1989; Abdel-Dayem, 1997; Madramootoo, 1997; Wolter and Kandiah, 1997).
Policies that motivate improvements in water management may reduce deep percolation and the volume of drainage water that must be disposed or re-used. Improved water management can also reduce the salt loads imported with irrigation water in arid areas. Rosegrant and Ringler (1997) recommend policy reforms including economic in-centives for water conservation, water markets, privatization of management functions, and effluent charges. The World Bank (1992, p. 145) suggests that seepage losses, waterlogging, and salinization may be addressed more effectively by improving water management than by modifying physical structures. Faruqee (1996) suggests that fundamental changes in water pricing and institu-tions are required to improve the efficiency of allocating water and maintenance responsibility in Pakistan. Mellor (1996) includes water charges that recover operation and maintenance costs among his policy recommendations for Pakistan, while Pinstrup-Andersen and Pandya-Lorch (1994) suggest that appropriate allocation mecha-nisms are needed urgently to prevent excessive water use.
2. Conceptual framework
Waterlogging and salinization arise in arid ar-eas largely because two essential resources, irriga-tion water and the assimilative capacity of unconfined aquifers, are not priced or allocated correctly to reflect scarcity values and opportunity costs. Volumetric water prices are lower than optimal or non-existent in many irrigated regions, and allocation procedures are often based on rotational schedules that do not provide the flexi-bility or certainty required for farmers to optimize water use. In most irrigation systems, farmers may ‘discharge’ deep percolation to unconfined aquifers at no charge and with no restrictions, even though assimilative capacity is limited. As a result, the scarcity values of irrigation water and aquifer capacity are not communicated to farmers in resource prices or allocations, providing them with little incentive to consider the opportunity costs or the off-farm effects of irrigation and leaching activities.
The economic rationale for policy intervention is examined by reviewing farm-level and project-level crop production models to determine how the optimal strategies for individual farmers differ from those that maximize the sum of net benefits in an irrigated region. The dynamic models allow for changes in soil salinity and water table depth, and substitution among water and non-water puts. Regional water supply constraints are in-cluded in the project-level model to describe the opportunity cost of water use.
2.1. Farm-le6el model
The farm-level irrigation objective can be de-scribed as maximizing the present value of net revenue, over time, while maintaining the quality of productive resources. Farmers in arid areas must apply supplemental water for irrigation and leaching to satisfy crop water requirements and prevent salt accumulation in the root zone. Both irrigation and leaching add salt to the soil profile. The net change in soil salinity is usually positive following irrigation events because plants use the water, while leaving salts in the soil (Rhoades and Loveday, 1990). Leaching events displace salts
from the profile by flushing soils with relatively good quality water. In areas where downward movement of water is restricted by impervious clay layers, deep percolation can cause a rise in the height of shallow water tables. In the absence of policies that address irrigation and leaching, farmers will not have an economic incentive to consider the effects of their decisions on regional water tables.
A farmer’s objective function for production of a single crop on one unit of land can be described as follows:
Max PVNR=
&
t=0
[PYY(VRM,VLM,QR,QL,XR,XL,XN,ECS,DWT)
−PW(VR+VL)−PRXR−PLXL−PNXN]e
−rtdt
subject to:
DECS=
g(ECS,ECG,DWT,VRM,VRD,VLM,VLD,QR,QL)
and: VRM=VRM(VR,XR); VRD=VRD(VR,XR)
VLM=VLM(VL,XL); VLD=VLD(VL,XL) (1)
where PVNR is the present value of net revenue,
PYis the unit price of output,Yis output per unit
area,VRandVLare the volumes of water used for
irrigation and leaching, respectively, QR and QL
are the salt concentrations in irrigation and leach-ing water,XR, XL, and XNare indices of variable
inputs used for irrigation, leaching, and non-irri-gation tasks (with pricesPR,PL,PN),PWis water
price,ECSis a measure of salinity in the crop root
zone,ECGis the salinity of shallow groundwater,
DWT is depth to a shallow water table,VRM and
VLM are the volumes of irrigation and leaching
water, respectively, that remain in the crop root zone (available for transpiration), VRD and VLD
are the volumes of irrigation and leaching water that move through the root zone, becoming deep percolation, DEC
S is the time derivative of soil
salinity, DEC
S=g() is the equation of motion,
The model includes separate irrigation and leaching activities because farmers in arid areas often apply water specifically for leaching before crops are planted or while fields are fallow. They may also use different methods for irrigation and leaching events, and the impact of water deliveries on deep percolation may vary by technology and season. As a result, separate policy programs or parameter values may be appropriate for irriga-tion and leaching. The volume and quality of leaching water are included in the crop yield function because some of the water and salt ap-plied during leaching events remain in the soil and affect plant growth. For example, many cotton farmers pre-irrigate fields to leach salts from the root zone and establish deep moisture to satisfy crop water requirements in late summer when they cannot irrigate large fields quickly enough to keep pace with evapotranspiration.
The farm-level objective can be viewed as an optimal control problem in which the control variables are the water used for irrigation and leaching (VR and VL), and the other variable
inputs (XR,XL, andXN). The state variable is soil
salinity (ECS), which changes over time as a
func-tion of the salt load moving in and out of the soil profile. The regional water table depth (DWT) and salinity of shallow groundwater (ECG) are
treated as exogenous variables in the farm-level model because individual farmers have no incen-tive to consider the impacts of their activities on those variables.
A current value Hamiltonian (Pontryagin et al., 1962; Chiang, 1992) combines the farm-level ob-jective function with the equation of motion, as in:
HFt=PYY(·)−PW(VR+VL)−
PRXR−PLXL−PNXN+mtg(·) (2)
whereHFt represents the farm-level Hamiltonian,
mt is the current value costate variable, and Y()
and g() are the crop yield and soil salinity func-tions from (Eq. (1)). The first-order necessary conditions with respect to water applied for irriga-tion and leaching events (VR and VL) are the
following, whereAis an index representing irriga-tion and leaching (A=R,L):
(HFt (VA=PY
(Y
(VAM (VAM
(VA −PW+
mt
(g
(VAM (V
AM
(VA +mt (g
(VAD (V
AD
(VA =0 (3)
(Eq. (3)) can be re-written as (Eq. (4)), which requires that farmers equate the marginal value product (MVP) of irrigation and leaching water plus the marginal value gained by removing salts from the soil with the price paid for water (PW)
and the marginal damage caused by adding salts.
MVPVA+mt
(g
(V
AD
(V
AD
(V
A
=
PW−mt
(g
(VAM (VAM
(VA ; for A=R,L. (4)
The costate variable, mt, describes the marginal
cost, or damage, as a result of an increase in soil salinity. Hence, mt will be negative when
increas-ing soil salinity reduces crop yield. The partial derivatives describing the impact of deep percola-tion on the rate of change in soil salinity ((g/(VRD and (g/(VLD) will be negative, as a
larger volume of deep percolation removes more salt from the crop root zone. The partial deriva-tives describing the change in deep percolation with changes in water deliveries ((VRD/(VR and (VLD/(VL) will be positive. Hence, the second
term on the left side of (Eq. (4)) will be positive, adding incremental value to the marginal value product of water with respect to crop yield.
The partial derivatives describing the impact of water entering the crop root zone on the rate of change in soil salinity ((g/(VRM and (g/(VLM)
and the partial derivatives describing the change in root zone moisture with changes in water deliv-eries ((VRM/(VR and (VLM/(VL) will be positive.
Hence, the second term on the right side of (Eq. (4)) will be negative, resulting in the addition of incremental costs to the price farmers pay for water.
The first-order necessary conditions with re-spect to the non-water inputs used for irrigation and leaching (XR and XL) are the following
(Eq. (5)) can be re-written as (Eq. (6)), which requires that farmers equate the marginal value product of non-water inputs and the marginal value gained by reducing the rate of salt accumu-lation in the soil with the price of those inputs (PR
andPL) and the marginal cost of reducing the rate
of salt removal.
The partial derivatives describing the change in root zone moisture with changes in irrigation and leaching inputs ((VRM/(XRand(VLM/(XL) will be
non-positive, as improvements in water manage-ment will either reduce or have no impact on the volume of water made available for transpiration. When these derivatives are negative, improve-ments in water management will provide farm-level marginal benefits by reducing the rate of salt accumulation in soils.
The partial derivatives describing the change in deep percolation with changes in irrigation and leaching inputs ((VRD/(XRand(VLD/(XL) will be
negative, as improvements in water management will reduce deep percolation during irrigation and leaching events. Hence, the second term on the right side of (Eq. (6)) will be negative, suggesting that improvements in water management will im-pose a farm-level marginal cost, to the extent that deep percolation is reduced during irrigation and leaching events.
The necessary condition pertaining to the state variable, soil salinity, is the following:
PY
The first term on the left side of (Eq. (7)) describes the economic impact of an increase in soil salinity on crop yields in the current year, while the second term describes the economic cost of salt accumulation in the root zone. The third term is the time derivative of the costate, which may rise or fall, over time, in response to changes in crop prices or production costs. For example, when crop prices rise, relative to costs, the eco-nomic cost of salinity-induced yield reductions increases. In sum, the terms on the left side of (Eq. (7)) describe the current-year and long-term farm-level marginal damages from an increase in soil salinity. A farmer would be willing to pay this amount to prevent salt accumulation in any year. The term on the right side of (Eq. (7)),rmt, can
be interpreted as the annual payment a farmer would need to make, to ‘discharge’ his or her salts on the land of another identical farmer, with that farmer’s agreement. Given that the costate, mt,
represents the marginal damage generated by an additional unit of salt, a farmer accepting such damage would require that payment as compensa-tion. The annual opportunity cost of the payment is rmt. Therefore, (Eq. (7)) suggests that the
opti-mal rate of salt accumulation occurs when the marginal damage caused by salts is just equal to the annual opportunity cost of the payment that would be required to prevent the damage.
2.2. Project-le6el model
HPt=%i=1
where HPt represents the project-level
Hamilto-nian and individual farmers are described by the superscript i=1,...I. There is a current value costate pertaining to soil salinity, ni
t, for each
farmer, while there is a single costate, zt,
pertain-ing to depth of the shallow water table, DWTt.
The rate of change in depth to water table, over time, is a function, h(), of the sum of deep percolation from irrigation and leaching on all farms in the region. There is a current value Lagrange multiplier, lt, pertaining to the annual
water supply constraint. The variables TVt and
TCW denote the total volume of surface water
available and the total costs of water delivery in the project area during year t. All of the water and non-water inputs in the yield function are superscripted with i, denoting farm-level choices of those inputs.
The necessary conditions of the project-level model with respect to water applied for irrigation and leaching (VR and VL) are:
Three terms in (Eq. (9)) do not appear in necessary conditions for the farm-level problem:
MCW,lt, and the chain-rule derivative describing
the economic effect of irrigation and leaching water on depth to water table. The first term is the marginal cost of water delivery to farmers,
while lt represents the opportunity cost of water to other farmers in the region. The value of l
t
will be zero if the regional water supply con-straint is not binding, and positive when the volume of water demanded by all farmers ex-ceeds the available supply.
The third term includes the current value costate, zt, which is positive in cases where an
increase in water table depth improves produc-tivity. The partial derivative of water table depth with respect to deep percolation,
(h/(VLDi
, will be negative, while the partial derivative of deep percolation with respect to the volume of water diverted for leaching,
(V
LD i
/(V
L
i, is positive. Hence, the third term will
be negative in cases where deep percolation causes a rise in the shallow water table, reduc-ing productivity. This term describes an external cost that farmers do not consider when choosing the volume of water to divert for irrigation and leaching events (Young and Horner, 1986; Izac, 1994; Strojan, 1995). These are the external costs that generate regional waterlogging and salinization problems in irrigated areas.
Another potential difference in the models in-volves the discount rates that are embedded in the current value costates, mt in the farm-level
model and nt
i in the project-level model. If
indi-vidual discount rates are higher than the social rate, farmers will place greater relative emphasis on the near-term benefits of irrigation and leaching than would the public, resulting in faster rates of waterlogging and salinization than may be socially optimal. This effect, in combination with inappropriate prices and poorly defined property rights, may explain why many large-scale irrigation projects encounter problems of waterlogging and salinization sooner than expected by project planners (Abul-Ata, 1977; Kapoor and Kavdia, 1994; Ra-manathan and Rathore, 1994).
The necessary conditions for the project-level model with respect to the non-water inputs used for irrigation and leaching (Xi
nt
(Eq. (10)) contains one term that does not appear in the necessary conditions for individual farmers. That term describes the economic value of the marginal effect of irrigation or leaching inputs on depth to water table. As noted above, the value of the costate,zt, will be positive, while
improvements in irrigation methods will reduce deep percolation and increase the depth to water table. Therefore, the sign of this new term is positive in (Eq. (10)), describing an external benefit of improvements in irrigation methods. An economic incentive program would be needed to motivate farmers to consider this external benefit when choosing irrigation inputs.
The necessary conditions pertaining to soil salinity on farm fields are:
PY
These conditions are similar to those for indi-vidual farmers maximizing the present value of net revenue, as shown in (Eq. (7)). However, as noted above, the social discount rate, s, likely differs from farm-level discount rates, causing the costate values, nt
i, to differ from farm-level
costates.The necessary condition pertaining to wa-ter table depth is:
%iI=1
PYThe first term on the left side of (Eq. (12)) includes the sum of the economic impact of higher water tables on crop yields in the region and the long-term impact of rising water tables on soil salinity. The partial derivatives of crop yield with respect to water table depth,(Yi
/(DWT, are
pos-itive, as greater depths improve productivity. The partial derivatives of soil salinity with respect to water table depth, (gi/(DWT, are negative, as
rising water tables cause upward movement of salts into the root zone. Given that output price,
PY, is positive and the costates, nt
i are negative,
the first term describes the near-term and long-term regional benefits from an increase in water table depth.
The second term describes the long-term eco-nomic impact of rising water tables, where both the costate, zt, and the partial derivative of the
equation of motion with respect to water table depth, (h/(DWT, are non-negative. The third
term is the time derivative of the costate, which may rise or fall, over time, in response to changes in crop prices or production costs. In sum, the terms on the left side of (Eq. (12)) describe the current-year and long-term regional marginal benefits of an increase in water table depth.
The term on the right side of (Eq. (12)),szt, can
be interpreted as the annual opportunity cost of the payment a region would have to make to obtain an incremental increase in water table depth, if such a market existed, where the value of that increment is described by zt and the social
discount rate iss. As noted above, the left side of (Eq. (12)) describes the regional marginal benefits of an increase in water table depth. Hence, opti-mization of the project-level model requires that marginal benefits are equal to the opportunity cost of obtaining an increase in water table depth in all years.
3. Policy implications
modify the farm-level price or availability of inputs may be useful in closing the gap between farm-level and socially optimal input choices.
3.1. Water prices
The necessary conditions in (Eq. (4)) and (Eq. (9)) suggest that the optimal prices for irrigation water are the following:
PWA
i* =MC
W−zt
(h
(VADi
(VADi
(VAi +lt=0 ;
for i=1, . . .I; and A=R,L. (13)
where Pi*
WA represents the optimal irrigation and
leaching water prices. In theory, if such prices are substituted for PW in (Eq. (4)), farmers will be
motivated to select the socially optimal volumes of irrigation and leaching water, as prices will reflect opportunity costs and the long-term im-pacts of deep percolation. However, several prac-tical issues arise regarding the estimation and use of these optimal water prices.
(Eq. (13)) depicts prices that vary among farm-ers according to the impacts of farm-level water deliveries on deep percolation. In most irrigated areas those effects cannot be estimated accurately, and farm-specific water prices are not feasible. However, an estimate of the average value of the impacts described by the second term on the right side of (Eq. (13)) can be obtained using hydro-logic data or assumptions regarding the impact of water deliveries on water table depths. Technical coefficients that describe proportions of surface runoff, deep percolation, and crop water use for alternative irrigation methods can be used to esti-mate the deep percolation derivatives, (VRD/(VR
and(VLD/(L, while soil characteristics and
hydro-logic relationships can be used to estimate the water table depth derivatives, (h/(VRD and (h/(VLD. The costate, zt, which is the marginal
value of an increase in water table depth, can be estimated by examining data describing the im-pact of regional water table depth on agricultural production values (e.g. Kemal et al., 1995b, p. 24).
The value ofltcan be estimated by considering
the increase in regional net revenue that could be
generated with additional water supply. In regions with an active water market, lt may be estimated
using market prices, as these reflect the opportu-nity cost of water. The marginal cost of water supply, MCW, includes operation and
mainte-nance costs for the delivery system and a capital replacement charge. The portion of those costs included in water prices may vary with public goals and the distribution of benefits from irriga-tion projects (Sampath, 1992).
Implementing water prices can also provide an economic incentive for public agencies to reduce seepage along main and secondary canals, partic-ularly if agency budgets are made dependent upon the collection of revenue from water sales (Moore, 1989; Small and Carruthers, 1991, pp. 52 – 53; Ellis, 1992 p. 271). Water agency personnel in regions where water is delivered at no charge to farmers and water rights are not assigned have little incentive to spend limited funds on canal improvement projects (Repetto, 1986). Placing a value on water at the agency-level may reduce the extent of waterlogging and salinization caused by seepage from main and secondary canals.
Volumetric water pricing is common in the Western US and other industrialized regions where the scarcity value of water justifies the cost of accurate measurement, and where automated metering technology is available. Water is also priced by volume, or an appropriate proxy, in many developing countries. For example, many farmers in India and Pakistan purchase ground-water in local markets, paying hourly rates for the use of pumps and fuel (Pant, 1991). Rates vary according to water quality, pump size, and energy source (diesel or electricity), and are substantially higher than the equivalent price of canal water (Shah and Raju, 1988; Janakarajan, 1993; Mitra, 1998).
Farmers in Bulgaria have been required to pay both a fixed and variable charge to the national government for irrigation water service since 1994. The initial prices of $US 7.30 per ha and $US 0.025 per m3 ($30.85 per acre-foot)
discour-aged irrigation and the government collected less than 25% of the fixed charges (Koubratova, 1997). Prices have been reduced in recent years, reaching $1.60 per ha and $0.009 per m3 in 1996.
Farm-level questions regarding the procedures used to determine water prices and to estimate water volumes where meters have not been in-stalled are being addressed by the central government.
Economic reforms in China have encouraged irrigation districts to implement water pricing programs to support operation and maintenance. Irrigation charges are $13.08 per ha and $0.0017 per m3 in the Nanyao Irrigation District, and
$1.74 per ha and $0.0084 per m3 in the Bayi
Irrigation District, both of which are in the Shiji-azhuang Prefecture (Johnson et al., 1998). Farm-ers irrigating with groundwater in Bayi are charged an additional $17.44 per hectare. Water rates have increased substantially since the middle 1980s, motivating farmers to reduce water deliver-ies by improving irrigation practices.
3.2. Water markets and water rights
Formal and informal water markets enable farmers to lease or sell a portion of their water supply for a specific time interval or in perpetuity (Dudley, 1992; Rosegrant and Binswanger, 1994; Rosegrant et al., 1995; Rosegrant and Meinzen-Dick, 1996; Dinar et al., 1997). Markets encour-age farmers to consider opportunity costs explicitly when they choose crops and irrigation methods (Dinar and Letey, 1991; Weinberg et al., 1993). Farmers with water market opportunities may choose to improve management practices to make water available for sale or lease. Farm-level efforts to ‘convert’ surface runoff or deep percola-tion into marketable water volume will reduce pressure on regional water tables.
Water markets relieve public agencies of the task of estimating the opportunity cost or scarcity value of water, as market prices reflect current
perceptions and expectations regarding those val-ues. However, markets do require that property rights to water are defined and enforced (Win-penny, 1994 p. 57; Hearne and Easter, 1995; Anderson and Snyder, 1997, pp. 22 – 25; Perry et al. 1997). Transaction costs may prevent market formation in some areas (Rosegrant and Binswanger, 1994), and improvements in measure-ment and control capability may be needed. How-ever, those improvements may also support volumetric water pricing and may enable water agencies to provide farmers with greater flexibility in scheduling water deliveries.
Informal water markets have existed for many years in Pakistan and northern India, where farm-ers trade their time allotments on surface water canals or buy and sell groundwater pumped from private tubewells (Easter and Hearne, 1995). Groundwater markets have expanded in recent years, enabling many small and marginal farmers to increase agricultural production by supple-menting their limited surface water supplies (Chaudhry, 1990; Shah, 1993; Meinzen-Dick, 1994; Repetto, 1994, pp. 41 – 43; Shah and Bal-labh, 1997). Groundwater and canal water trans-actions account for 30% of the irrigation water used by farmers in some regions (Rinaudo et al., 1997). Extensive pumping of shallow groundwater relieves pressure from high water tables in some areas, while in other regions excessive pumping causes concern regarding groundwater depletion (Rao, 1993).
Tradable water entitlements were introduced in South Australia in 1983, where subsequent mar-keting of water rights has enabled farmers to expand the production of higher valued crops using more efficient irrigation methods, while the volume of water applied to lower valued crops using less efficient methods has declined (Bjorn-lund and McKay, 1998). State officials require water buyers to develop an irrigation and drainage management plan to limit the impact of return flows from upstream areas on the salinity of water available to farmers in downstream areas.
3.3. Water allotments
Much of the world’s irrigation water is deliv-ered in large-scale systems that are managed by central or regional governments, with limited abil-ity to measure farm-level deliveries accurately. Public officials determine how much water will be delivered to tertiary canals by controlling the release and delivery of water along main and secondary canals (Upton, 1996, pp. 200 – 201). Water allotments to farmers are often defined by public agencies, or by water user associations that are formed to allocate water among farmers and collect funds for operation and maintenance. In many areas, water allotments are not clearly defined or enforced, resulting in the uneven distri-bution of water among farmers (Bromley et al., 1980; Easter and Welsch, 1986; Chambers, 1988; Wade, 1988; Bhutta and Vander Velde, 1992). Excessive use of water by head-end farmers causes waterlogging and degrades the quality of water received by tail-end farmers.
Negative externalities can be reduced by imple-menting or enforcing water allotments and allow-ing farmers to trade their allotments individually, or as members of water user associations. Many farmers in India and Pakistan trade their delivery turns to enhance irrigation flexibility within the otherwise rigidwarabandirotation system that has been used to allocate limited water supplies for more than 125 years. Improvements in operation and maintenance, and institutional enhancements may reduce seepage losses and improve the equity and efficiency achieved within the warabandi
sys-tem (Bandaragoda, 1998; Perry and Narayana-murthy, 1998).
The national groundwater agency in the Cape Verde Islands has implemented a fixed-access ro-tation system, replacing one in which farmers could withdraw as much water as desired during each rotation. The new system reduces uncer-tainty regarding water allotments and the time interval between rotations. Farmers trade access times to gain the flexibility required for producing higher valued crops (Langworthy and Finan, 1996).
In Mexico, the National Water Commission has transferred responsibility for operation and maintenance of secondary and tertiary canals to water user associations that allocate water accord-ing to each farmer’s proportion of the total irriga-ble area (Kloezen and Garces-Restrepo, 1998; Levine et al., 1998). Some associations use farm-level crop intentions to determine water alloca-tions, effectively restricting the area planted in crops with large water requirements during dry years. Others allocate each year’s water supply among farmers, allowing them to choose crops accordingly. Associations adjust time allocations to compensate for water losses in delivery chan-nels, improving the distribution of water among head and tail sections of tertiary canals.
3.4. Land assessments
Public water agencies in India, Pakistan, and other countries with major irrigation projects charge farmers for water delivery services using area-based assessments intended to recover the costs of operation and maintenance (Sangal, 1991; Puttaswamaiah, 1994 p. 187; Kemal et al., 1995b; Sinha, 1996; Tsur and Dinar, 1997). The charges are usually higher for crops with larger water requirements and in regions with higher costs of service. These programs are less costly to imple-ment than volumetric water pricing (Small and Carruthers, 1991 p. 141) and they offer some incentive to choose crops with smaller water re-quirements, but the farm-level marginal cost of water within a season is zero.
by modifying the crop-specific price structure to reflect the deep percolation objective. In particu-lar, an area-based surcharge can be imposed on fields that receive larger water deliveries than crop-specific targets determined by a water agency, in consultation with farmers and water user associations. The targets could be established at levels that enable farmers to satisfy crop water and leaching requirements without generating ex-cessive deep percolation. Surcharge parameters could be determined by estimating the external costs of deep percolation which include the capi-talized value of yield reductions in future and the amortized cost of installing a regional drainage system to manage the high water table.
3.5. Non-water inputs
Improvements in water management practices can generate farm-level benefits by reducing the volume of water applied to soils and, thus, reduc-ing the rate of salt accumulation (Eq. (5)). This provides an incentive to implement such practices, which include sprinkler and drip irrigation, laser leveling, and the hiring of additional labor to improve the management of surface irrigations. Irrigating with greater precision enables farmers to reduce drain water volume, while maintaining or improving crop yields (Khanna and Zilberman, 1997). However, the near-term cost of irrigation increases with higher technology systems and a long-term cost may arise if the reduction in deep percolation reduces the rate at which salts are removed from soils. Farmers selecting irrigation methods will evaluate both of these effects, but will not consider the off-farm benefits of increas-ing regional water table depth (Eq. (10)).
The public benefits of improvements in irriga-tion methods may be sufficient to justify policies that motivate farm-level adoption, such as subsi-dies for hiring additional labor or for purchasing selected irrigation systems. Providing small farm-ers with access to credit and offering low-interest loans may encourage them to purchase new irriga-tion systems or to install private tubewells to pump water from shallow aquifers (Shankar 1992, pp. 160 – 168; Wichelns et al., 1996). However, credit subsidies and flat-rate energy pricing can
exacerbate problems of excessive withdrawals and salinization in regions where the off-farm impacts of groundwater pumping are negative (Bhatia, 1992; Rao, 1993).
4. Conclusions
Waterlogging and salinization continue to cause economic losses in many areas of the world, though farmers and scientists have been aware of these problems and potential technical solutions for thousands of years. The farm-level and pro-ject-level models presented here suggest that im-provements in the definition of property rights to scarce resources and more appropriate pricing of irrigation and drainage inputs may reduce the rate of increase in waterlogged and saline areas. Many of these improvements can be implemented while installing or renovating water delivery and subsur-face drainage systems, and when transferring re-sponsibility for operation and maintenance from central government agencies to local irrigation districts.
Public policies that acknowledge farm-level eco-nomic incentives have been implemented in many regions during the 1980s and 1990s. Tradable water rights have been implemented in Chile and Australia, for example, while farmers in India and Pakistan have expanded their use of formal and informal water markets for surface water and groundwater. Responsibility for irrigation systems has been transferred to water user groups in In-donesia, Mexico, the Philippines, and Turkey. Water pricing programs have been enhanced in Bulgaria, China, Mexico, the US, and many other countries.
proce-dures have encouraged farm-level improvements in water management in many irrigated areas, while in others, public officials have not imple-mented such programs due to concerns regarding the inability to control and measure farm-level water deliveries accurately.
Efforts to improve water delivery systems and to recover the costs of those improvements from farmers will likely continue in many countries, as the scarcity value of water and the economic losses caused by poor water management increase in the future. Public officials and water agency staff can enhance those efforts by developing per-tinent incentive programs, selecting appropriate parameter values, and seeking support for imple-mentation among farmers and water user associa-tions. Experience suggests that such efforts may be very helpful in motivating farmers to improve irrigation practices, reduce deep percolation, and apply leaching fractions that maintain soil quality, while reducing the rate of increase in waterlogged and saline areas.
Acknowledgements
This paper is Rhode Island Agricultural Experi-ment Station Publication Number 3685. The help-ful comments of three reviewers are appreciated.
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