Water Demand Management and Economic Value of Water in the Indus Basin

Abstract

The present study was conducted on Water Demand Management and Economic Value of Water in the Indus Basin. To fulfill the objective of the study secondary and primary data sets were used. The primary data for study was collected through a farm survey of nearly 120 farmers on distributaries in Sargodha district. The data for supply and demand was taken from secondary sources. The sources include but not limited to the Agricultural Statistics of Pakistan, 2005-06, Economic Survey, 2006, the Water and Power Development Authority. The crop yield stress data was taken from Mona Reclamation project and Punjab Agriculture Research Institute, Faisalabad. Water supply and demand was estimated by using water balance equations. In order to calculate the Economic Value of Irrigation Water residual imputation approach was used. The change in net income method can be adapted to mathematical programming models (LP model) of farm situations to approximate a functional relationship between net benefits and irrigation water use . The study found that the water balance was 140 billion M3 including availability of rainfall. There was a net recharge to groundwater of the Indus Basin in the order of 63 billion M3, which can be pumped for consumptive and non-consumptive uses. The gross water supply for the agriculture sector was nearly 190 billion M3 from both surface and groundwater resources. The gross water demand for the agriculture sector was nearly 210 billion M3. Thus, there was a shortfall of around 20 billion M3 for the sector. In all four Linear Programming models were developed for small, large, head and tail farmers in the Sargodha region. The average size of small holding was 6.5 acres and that of large was 32 acres, while head farm size was 15 acres and that tail 13 acres. The cropping intensities at small, large, head and tail were 135 percent, 116 percent, and 151 percent and 127 percent, respectively. The analysis of cropping pattern showed that wheat was the predominant crops at all farms followed by Kharif and Rabi fodders. However, most of the farmers showed mixed cropping pattern citrus with wheat and citrus with berseem. The results revealed that economic value of water at discounted water availability varied from Rs.1.63 per M3 to Rs 3.23 per M3 on small farm. The economic value of water was Rs 1.63/ M3 even at 60 percent water discount. In case of large farm, the economic value varied from Rs.1.93 per M3 to Rs 3.76 per M3 at various discount scenarios. Even under extreme stress scenarios, the economic value was Rs 1.93/ M3. In case of head, the value varied from Rs. 1.03/ M3 to Rs. 2.01/ M3 and at the tail farm it varied from Rs. 1.39/ M3 to Rs 2.74/ M3. The analysis showed that farmers have the paying capacity of water charges under extreme water stress scenarios. It is implied that water pricing policies, as a strategy for water demand management, aims at water conservation and consequently increase in agricultural production. It is anticipated that irrigation water efficiency will be improved, as farmers change their strategy and practices in irrigated agriculture.