Evaluation of existing irrigation water pricing policy in Pakistan

Existing water charges must be significantly increased, this study argues, to bridge the increasing revenue-expenditure gap, and measures must be initiated to reduce the operations and maintenance costs of public tubewell schemes. The economic evaluation included herein takes into account the impact of present levels of water charges on allocative and water use efficiencies, net farm income, cropping patterns, and other parameters. The study found that the most significant effect of neglecting cost recovery has been the deterioration of irrigation infrastructure due to deferred maintenance, and that reasonable increases in water charges are within the paying capacity of farmers. It is suggested that the most appropriate way to reach the target level for water charges is through a phased schedule based on gradual increases to ensure farmer acceptance. Other institutional and financial constraints which, in addition to low water charges, impede Government cost recovery are briefly addressed.