Trends and determinants of irrigation investments in the Philippines

However, a number of factors led to a slowdown in irrigation investment in the 1980"s. The appropriate level of investment in irrigation has become a matter of considerable debate. To be able to develop a suitable public investment strategy for irrigation in the Philippines, the causal mechanisms that drive the decision-making process must be clearly understood. Using time series data from the period 1966 to 1987, a distributed lags model was constructed depicting the major factors influencing the investment decision-making process at the national aggregate level. Separate sets of equations were specified for investments in national and communal irrigation systems because of significant differences in their scale, funding sources, and gestation period. The analysis indicates that a cyclical pattern exists in investments in irrigation systems. After reaching a peak in 1980, investments fell to less than a third of their 1980 level by the mid to late 1980"s. There is now a growing concern in the Philippines that a slowdown in irrigation investment, coupled with a tapering of growth in rice yields, will lead to higher rice prices and imports in the 1990"s. Investments in large storage irrigation systems, typically funded by foreign donors, will not come on stream in time to offset any near term shortfall in rice supply. Difficult and costly adjustments may be needed to increase rice production significantly in the short run. (Author abstract)