IWMI

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Benefits and Cost of Irrigation Water
TransfersA case study of Polavaram

• IWMI
• Anik Bhaduri, Upali Amarasinghe, Tushaar Shah, BK
  Anand

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Objectives - Irrigation cost/benefit assessment

• Main objective
• Assess direct/indirect irrigation benefits and
  costs of the Polavaram project
• Specifically, net benefits due to irrigation
  water transfers on
• Crop production
• Livestock
• Fisheries
• Forward linkages (agro based industries,
  transporation, storage etc.)
• Backward linkages (Farm equipment s, agriculture
  inputs supplies, Equipment maintenance etc. )

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Outline - Presentation

• What Polavaram irrigation proposes?
• Present status of irrigation in RBC (en-route
  link) and LBC
• Emerging cropping patterns and irrigation
• Net benefits of irrigation source wise
• Cost/benefits of the irrigation water transfers

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Does irrigation benefits exceed the cost? It
does, but under different circumstances
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What Polavaram proposes?
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What Polavaram proposes?
Transfer or use 287 tmc of water
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Cost/benefit methodology

• Conceptual and empirical Domain of the analysis
• Assess benefits of irrigation in LBC RBC
• Valuation of ex-ante benefit analysis - Reference
  condition
• Area that could be like Polavaram command after
  irrigation water transfers
• Net value added per ha or m3 of after water
  transfers
• Requires the differences irrigated and rainfed
  crop yields, input application, other cost of
  production, land rent etc.

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Cost/benefit methodology

• Sample of 1000 farmers
• 37 mandals, 50 villages
• 521 farmers in the RBC, 479 farmers in the LBC

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Current status of irrigation

• 94 of the RBC crop land are irrigated
• Groundwater is the dominant source

• 80 of the LBC crop lands are irrigated
• Groundwater is the dominant source

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Current status of irrigation
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Current status of irrigation
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Current status of irrigation
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Current status of irrigation
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Current status of irrigation

• Net value is high in areas with GW water depth
  75-100m

• They have high capacity pumps, and diversified
  cropping patterns

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Polavaram project irrigation
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Benefits and costs
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Benefits and Cost
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Benefits and Cost analysis - Assumptions

• Assumptions-
• Life of the Project-100yrs
• Depreciation rate 1 per year
• Rate of Interest 8
• Period of Construction-15 yrs
• Rehabilitation Cost-None
• Ignores the positive externalities of groundwater
• Recharge and negative externalities of water
  logging and salinity.

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Cost of supplying irrigation
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Benefit cost ratio and IRR
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Livestock benefits
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Livestock benefits
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Salient Observation and Policy Implications

• Much of cultivated area in the proposed command
  area is already irrigated, and particularly in
  the right canal command area.
• Ground water is the most dominating form of
  irrigation in the command area.
• Farmers are using groundwater to grow high valued
  annual crops.
• Present cropping intensity is high as 165 in the
  right command area due to extensive cultivation
  of annual crops using groundwater irrigation

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Salient Observation and Policy Implications

• Higher benefits if the farmers continue to grow
  annual crops and benefit cost ratio will be more
  favorable for the implementation of the project.
• Polavaram Dam may also be useful in GW
  sustainability where much of the groundwater
  resource is used to grow high valued annual crops
  , particularly in the rabi season.
• Livestock benefits will be substantial if the
  farmers retain their livestock even after the
  introduction of surface water or with a reduction
  in fodder cost.
• Livestock can increase the overall benefits of
  the Polavaram dam by 8 to 32 depending upon
  different scenarios.
• The gains will be maximum if the farmers grow
  maize for livestock feed in the rabi season and
  retain their livestock.

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• Thank you