Dr. R. Chand, National Centre for Agricultural Economics and Policy Research, India

1. Report by Moderator (1)
Ramesh Chand
Ramesh Chand
Incentives for Sustainable & Efficient
Water Allocation and Management
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2. CONTEXT
• Rising stress on water resources – pain is felt more by
people than its realisation by policy makers
• Water is a great source of inequality in itself and it
creates layers of inequalities
• Most of the incentives follow, or, are based on use of
water in agriculture
– Energy subsidy, irrigation subsidy, fertiliser
– Output support highly skewed towards irri areas and crops
• Policies often take myopic view – sacrifice long run to
meet short term goals.
• The gap between what ought to be done and what is
being done: this is appalling in water policies
• Consequence: rising stress and degradation of water
services. Robbing future generations of livelihood
Ramesh Chand
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3. …cont
• Dichotomy
– Irrigated – Profligacy, wastage
– Dryland: Scarcity and stress
• Despite rising scarcity, little is done to conserve,
harvest, manage or improve efficiency of water
• Market forces add up to tragedy of dryland –water
intensive crops soon replace water efficient crops
and practices once water supply improves, leaving
DA to same fate.
• Incentives are also relative: strong externality leading
to uneven playing field for dryland agriculture
• Regressive. Can we make them progressive from DA
point of view? 3

4. Policy Questions and Issues
• What are the obstacles to having more effective
policies in action?
• How policies can improve efficiency in water
allocation?
• How to reduce financial and environmental costs of
water delivery and use?
• What incentives or new approaches are needed for
creating efficient use of water?
• What are the cost-rationalization policies and their
impacts on productivity, efficiency, food security,
rural employment, farm income, livelihoods and
sustainable growth?
Ramesh Chand
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5. What Constrains Policy Support to DA
Ramesh Chand
• Incentives for irrigated agriculture are simple
and straight based on external (market) input
• Complex in DA: built around natural resources,
farming system. Often involves group, area
• Not much clarity on design and structure of
incentives for DA.
• Bypassing process. Discussing implementation
without proposing what are app incentives
• Lot of effort needed on designing incentives
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6. Lessons
• Need for a paradigm shift in policies based on
specificities of agri in water stressed region
• Farm level incentives
– Shift basis of subsidies from “input centric” to
“technology and farm practices centric”
– Require designing of special incentive instruments
for supporting water use and agri in dryland farming
– Social scientists to design innovative incentives
• Infrastructure v/s incentives
• Dovetailing rural development policies (safety
nets) for creation of assets (NREGA-India)
Ramesh Chand
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7. …….. Lessons
• Promote crop pattern based on comparative
advantage in terms of natural resources
endowments rather than distorted market
signals
• Public investments:
– Need to assess from service delivery point of view
rather than from level of capital creation
– Public investments in water and
public investment for water
Ramesh Chand
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8. Key Messages
1. Food security cannot be sustained without water security
2. Need to raise investment in water-saving technologies
3. Investment alone is not sufficient: policies, institutions and
incentives at different levels (household, national and global)
4. Incentives and investments should go together
5. Action and research for improving food and water security
requires data and tools (accountability system). The gap in
accountability system among the different stakeholders
needs to be addressed.
6. Need to create and promote inclusive and stable land tenure
(land consolidation)
7. Removal of distortions in the existing incentive framework
that encourage less sustainable land and water management
practices, is essential.
Ramesh Chand
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9. Recommendations
1. Equip small-scale farmers with information, knowledge and
finance to invest in water saving technologies
2. Step up national and international efforts to mobilize public
and private funds for investment in water infrastructure
including water harvesting, conservation and greening.
3. Establish tariffs for cost recovery in transparent and
participatory mode.
4. Use water pricing policy to promote equity and efficiency
5. Adopt an integrated systems approach towards diversification
and risk management.
6. Design appropriate incentive structure that can be based on
technology and practices.
7. Countries should enhance cultural and ethical values towards
water and its management
Ramesh Chand
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10. Recommendations
1. Equip small-scale farmers with information, knowledge and
finance to invest in water saving technologies
2. Step up national and international efforts to mobilize public
and private funds for investment in water infrastructure
including water harvesting, conservation and greening.
3. Establish tariffs for cost recovery in transparent and
participatory mode.
4. Use water pricing policy to promote equity and efficiency
5. Adopt an integrated systems approach towards diversification
and risk management.
6. Design appropriate incentive structure that can be based on
technology and practices.
7. Countries should enhance cultural and ethical values towards
water and its management
Ramesh Chand
9