ABSTRACT
ANALYSING THE LINK BETWEEN IRRIGATION WATER SUPPLY AND AGRICULTURAL PRODUCTION: PAKISTAN Economic issues in irrigation systems in Pakistan P. STROSSER International Irrigation Management Institute, Lahore, Pakistan T. RIEU Irrigation Division, Cemagref, Montpellier, France
Abstract With increasing water scarcity, a move from supply to demand oriented interventions is often proposed for irrigation sector policies, with predominant role given to prices and markets. This shift increases the need to better understand the economic dimension of decisions taken by water users. The present paper uses examples from one irrigation system in Pakistan to investigate selected issues related to the economics of irrigation. First, the paper examines the relationship between canal water supply and farm decisions regarding crop choice and groundwater extraction, using economic models developed for individual farms. Aggregated at the level of a tertiary unit, these economic models support the analysis of the functioning of existing (tubewell) water markets. Issues related to market perfection, monopoly and value of water are discussed. The examples are used as starting point to emphasise the complexity of economic issues as a result of the high heterogeneity and spatial variability in farming systems and water constraints within an irrigation system, along with the existing structure of the agrarian society in Pakistan. Keywords: economics, groundwater market, irrigation, Pakistan
1 Introduction The discrepancy between stagnant agricultural production and increasing demand for agricultural products has been well documented and is a major issue in the agenda of policy makers and funding agencies in Pakistan [1]. With the importance of irrigated agriculture that covers 16 million hectares and current low agricultural productivity per unit of land (yields of the major crops in irrigation systems in Pakistan are among
the lowest in the world), most of the attention is given to potential improvements in agricultural productivity coming from the irrigation sector.
