Measuring and enhancing the value of agricultural water in irrigated river basins

This paper provides an overview of the issues in and approaches to measuring and enhancing the value of agricultural water in large irrigated river basins. It develops a framework and a set of indicators for valuing agricultural water by looking into various dimensions and underlying key factors that influence the value of water at micro, meso and macro levels. The indicators are applied to recent, primary- and secondary-level empirical data from the Indus basin Irrigation system of Pakistan. In addition, the paper compiles recent estimates of the value of agricultural water from 40 settings in 23 countries. Finally, the paper outlines measures for enhancing the value of agricultural water. The paper makes four main points: (1) The popular productivity indicators based on crop output do not capture the full range of benefits and costs associated with agricultural water use. (2) The value of agricultural water may not be as low as it is generally perceived or estimated when all major uses and direct and indirect benefits of water at various levels are properly accounted for. (3) The value of water varies across time and space, and the value to stakeholders at various scales (farmer, system manager, basin planner and national policy maker) could be quite different. For example, the estimate of agricultural water value in the upper Indus basin in Pakistan varies from US$0.04/m(3) at the farm scale to US$0.22/m(3) at the national scale. The farm-scale value is more relevant, e.g., for agricultural water charging policies, but for water-sector investments and allocation decisions, the national-scale value is important. The decision-making processes related to water sector investments, allocations, management, and charging/cost recovery schemes could be potentially misguided if key dimensions of water value that are related to water availability and use, benefits/costs, and temporal and spatial aspects are not properly accounted for in valuation. (4) Efforts should be directed not only at increasing the productivity of water in terms of mass of output per unit of water, but also the overall benefits or value of water at various levels for larger growth and poverty alleviation impacts, considering the sustainability of the systems.