10 - Setting irrigation fees: reconciling the need for funds with farmers' ability to pay

Summary

Introduction

‘User fees for irrigation are fine in principle, but irrigation is expensive. Is it realistic to expect that low-income farmers can afford to pay for the costs of irrigation?’ This fundamental question, which is commonly raised in deliberations on national policies for irrigation financing, is the focus of this chapter. Before proceeding further, however, we need to clarify what we mean by the term ‘afford’. We need to distinguish between a narrow, strictly economic meaning of the word and a broader meaning that also incorporates political concerns.

In a strictly economic sense, a water user can ‘afford’ an irrigation fee as long as that fee is smaller than his or her additional net income (prior to paying the fee) that is attributable to irrigation. In other words, as long as the irrigation fee does not leave the water user with less net income than would have been received in the absence of irrigation, the fee is affordable in an economic sense. The evidence from private irrigation is that in this sense of the word, poor farmers often can afford to pay quite large amounts for irrigation (Box 10.1).

But in a broader political context, the term ‘afford’ is not likely to be defined in this strict economic sense. Rather, it is more likely to be defined in terms of the amounts that governments are willing to ask the water users to pay.