2. The Importance of Water
• 80% of the human body is made up of water.
• Water is a crucial element of our food and
environment.
• 75% of the earth’s surface is made up of
water.
• Only 3% is fresh water.
• Only 1% of the water is suitable for human
consumption.
• Much of this water contains chemicals that
make it unsuitable for human consumption.
• We distinguish between quality of water and
quantity of problems.
• On average, we have sufficient water to meet
human needs. The problem is water
distribution.
3. Heterogeneity of Water
• There are differences in water availability within
regions. In Brazil, Mexico, California, Hawaii, and
Russia, there are flood regions and deserts.
• Differences in water availability over time matter.
During the same year you may have periods of
flooding and shortages.
• Differences in water quality are crucial.
Consumption, farming of various crops, and
production require water above the appropriate
minimum quality.
• Value and use of water are dependent on:
– Location
– Time
– Quality
6. Different Uses of Water
• Consumptive usage is diversion + consumption
of water through:
– Transforming it into water vapor (where it
is “lost” in the atmosphere),
– Letting it seep into the ground
– Significantly degrading its quality.
Examples:
• Residential
• Industrial
• Agricultural
• Forestry
• Non-consumptive usage. Does not reduce water
supply and, frequently, does not degrade water
quality. Examples:
– Fisheries use water as a medium for
growing fish.
– Hydroelectric users extract energy from
the water.
– Some recreation uses water as a medium
(example: swimming) and/or extracting
energy from the water (examples: white-
water rafting, surfing)
– Transportation is an especially important
use of water in the tropics.
7. Agricultural Values of Water Vary
• Agricultural value of water varies between crops
and locations. A relatively small fraction of the
water (20%) generates much of the value (more
than 70%).
• Crops such as flowers and strawberries can pay
more than $500/AF of water, cotton can afford
paying $40-$100/AF, and pasture $30/AF and less.
• Values of water vary by location and land quality
and are determined by market conditions.
• Industries and residential users can afford to pay
much more than agricultural field crops. Their
demand is relatively small (33%) but is
continually growing.
8. Overview of Irrigation
• Irrigated land has increased from 50mha (million hectares)
in 1900 to 267mha today.
• Between 1962 and 1996, the irrigated area in developing
countries increased at 2% annually.
• Irrigation has been crucial in meeting the food demands of
a doubling world population since WWII.
• Irrigation projects have been costly in terms of capital,
environmental degradation, and human health.
• Design and management of water resources have been
flawed. There is a growing perception of water supply
crisis, but what we have is a water management crisis.
• As the population is likely to grow (double) again, we need
to reform water institutions and policies.
• This presentation first assesses the water situation and
then introduces directions for reform.
9. Benefits of Irrigation
• Irrigation increases crop yield. The 17% of irrigated land
produces 40% of the global food.
• The value of production of irrigated cropland is about
$625/ha/year ($95/ha/year for rain-fed cropland and
$17.50/ha/year for rangeland).
• Irrigation affects total factor productivity (TFP) beyond the
input value of the water (Evenson, Pray, Rosegrant).
• Irrigation allows improved timing and spatial distribution of
water. It allows double cropping and enables stabilization
of supply and production of vegetables and fruits.
• Irrigation increases consumer well-being and employment
as well as farm income (net income increase per family in
Africa was $150 - $1000).
• The high productivity of agriculture slowed expansion of
deforestation.
10. Productivity of Irrigation
• Just et al. found the water share to be
.21 using Israeli data.
• Tfp of water is .11-.2.
• These are, however, marginal effects.
• There is a significant fixed effect of
water.
• There is significant heterogeneity
within fields; 35%
of yield variance is within fields.
The high yields from irrigation may
reflect climatic effects. Desert areas
have higher sun energy and degree
days that, with irrigation, lead to
higher yields.
Modern irrigation and pumping modify
ranking and values of land. Irrigation
technologies are water-quality
augmenting.
11. Water Productivity in Agriculture
• About 70% of the consumptive use of water is in agriculture.
Productivity is measured by net value generated (excluding
environmental side effects) and depends on location, time, crop, and
irrigation technology.
• Irrigation efficiency is the ratio of effective water (water consumed by
crop) to applied water. Land quality and irrigation technology affect
irrigation efficiency. It is low at steep hills & with flood irrigation.
Sprinkle and drip irrigation improve efficiency.
• Higher efficiency reduces residue and slows waterlogging. It results in
higher yield. Decisions whether or not to adopt depend on trade-off
between gains in yield and water saving and extra cost on water
management.
• Not all water conservation technologies require modern equipment.
Terracing of steep hills is one example, and there are many more.
• Adoption of efficient irrigation technologies can be triggered by higher
prices of water or penalty to residues.
12. Water Projects
• Projects modify bodies of water to enhance some
aspects of productivity. These projects may include:
– Navigation
– Storage
– Flood protection
– Hydroelectric
• Projects may have negative environmental and
social effects.
• A correct analysis of net discounted benefits is a
useful guide for project selection. It should account
for nonmarket impacts and uncertainties.
• Project design should consider institutional and
nonstructural solutions. Redesign of incentives may
lead to water savings, preventing a need for a new
dam.
13. Virtual Water
• This concept is used by noneconomists to deal with
water use heterogeneity and to justify trading.
• Value of water varies by location. Defining a water
shortage as a situation where water per capita is below a
certain level is not always useful when a region with
minimal water can use it productively and generate
resources to buy cheap water-intensive crops.
• For example, an acre foot of water used in flower
production is equivalent in the value of productivity to
30-40 acre feet used in wheat.
• Measure of water shortages should combine water
availability and productivity. Water constraints are less
binding as trade opportunities expand.
14. Scarcity, Government Power, Preferences,
and the Emergence of Water Institutions
• Water abundance + financially weak government + desire
for growth lead to water rights (prior appropriation).
• Water abundance + financial resources availability + desire
for growth lead to public supply projects + subsidies.
• Water scarcity leads to water trading.
• Financial crunch leads to privatization of supplies.
• Environmental concerns lead to water quality regulations +
environmental purchasing funds.
• Equity concerns leads to regulated pricing + subsidies.
15. Actions to Improve Efficiency of Irrigation
• Efficient investment in irrigation projects
– Capital subsidies and under-pricing the environment lead to
oversized projects.
– Full capacity is not needed to start the project. Over capacity is
needed to deal with uncertainty.
– Learning is crucial; delay is worthwhile. Invest when it is optimal
not at first moment when NPV is positive
– Project design should include institutions for allocation.
– Consider waterlogging cost and drainage in project design.
• Trade and the concept of “virtual water.” Forget self- reliance. Use
water for best outcome build storage and trade.
16. Inefficiencies in Micro-Level Water Management
• Farmer selection of crops and irrigation technologies
affect water use.
• Conservation technologies increase water use
efficiency but require higher per acre cost.
• There is 6% adoption of sprinkler and 1% adoption of
drip.
• There are low tech “drip”-like technologies.
• Low pricing of water does not justify adoption.
• Efficient pricing of water and drainage will lead to
adoption.
17. Conclusions
• More impact assessment of irrigation and more
econometric studies of performance are needed.
• Irrigation is crucial to productivity. Some systems are not
sustainable because of overpumping.
• There is much potential to increase water productivity
through incentives.
• One priority is to increase trading within regions and to
improve maintenance through institutional changes.
• Irrigation technologies and improvement in varieties are
other sources of improved water productivity in
agriculture.
• Water management is a major challenge. Cost benefits are
needed to improve investment choices and to integrate
agricultural and environmental and urban water uses. The
main challenge is efficient irrigation at the regional level.
