Privatization of SCARP [Salinity control and reclamation project] tubewells : some economic considerations

Currently, some 12,500 tubewells (generally of 2-5 cusec capacity) installed under this program are serving an area of about 7.4 million acres, which is about 20% of the Indus Basin"s cultivated area. More than 90% of SCARP capacity is located in fresh groundwater areas. The O&M of these tubewells is the responsibility of the Provincial Irrigation Departments (PID"s). Aside from controlling waterlogging and salinity, SCARP tubewells have served as an important source of supplemental water supply. As a result, agricultural production has improved in the SCARP areas. However, in recent years these public tubewells have become increasingly expensive to operate. The pumping capacity has declined due to deficient maintenance which, in turn, is due to the lack of money. To maximize social benefits from groundwater development, the government has decided to transfer the responsibility of groundwater extraction from the public sector to the private sector in fresh groundwater areas. This also includes transfer (or replacement) of SCARP tubewells to the farmers (or with farmer-owned tubewells). In this context, a pilot project was started in 1985-86 in SCARP I, but the government has expressed serious concerns about the high cost of the transition approach being followed under this project. This study presents the analysis of three important policy issues: (1) the value of water in SCARP areas, (2) the energy source (diesel or electricity) that should be used to operate the tubewells, and (3) the economics of possible SCARP transition options. (Author abstract)