By Leslie E. Small
During this publication, Leslie Small and Ian Carruthers study intimately the potentials and barriers of consumer charges for financing irrigation operation and upkeep. either authors have vast box adventure in irrigation in constructing nations and feature mixed this adventure with basic thoughts of economics to envision attainable institutional and monetary reforms that might no longer easily ask farmers to pay for an insufficient irrigation carrier, yet may create the possibility of major advancements within the caliber of the provider supplied. The proposed components of the sort of reform are mentioned in depth--a approach of person charges overlaying the recurrent charges of irrigation; a financially independent irrigation supplier which could maintain and use the charges to function and retain the irrigation amenities; and a macro coverage setting that isn't unduly skewed opposed to the rural area.
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Extra resources for Farmer-Financed Irrigation: The Economics of Reform
We should perhaps note here that a taxing of the economic rents obtained by irrigation farmers can provide an incentive for them to market more produce to increase cash income, an obvious desirable side effect for governments keen to supply urban food demands from dom estic sources. It can also play an important part in obtaining the full and proper use of agricultural land and the commercialisation of agriculture. The motives for holding land are seldom simply economic. There can be no doubt that in many countries landholders' political, social and longer term capital gains motives result in short-term underinvestment and neglect of irrigation facilities.
However, it is important to remember that water is a widely different commodity in different places and at different times. For example, the value of water varies sharply depending on the seasons and upon crop needs. At some times of the year it is so valuable that it is known for farmers to fight and even kill for water; in the same society later in the year, or after a rain, excess water may be a problem and diverted to wasteland or downstream. As the demand for irrigation water grows and it becomes relatively more scarce, formal institutional arrangements for managing water will become increasingly important.
In an economic analysis the real value or opportunity cost of the resources to the economy must be used and, in cases where the financial cost does not reflect the economic value, corrections are made by means of shadow prices. A shadow price is thus simply an estimate of a good's true opportunity cost to society. Given the data available in developing countries, no precise calculations can be made of shadow prices, but an estimate in the right direction with an approximate order of magnitude will be a step forward.
Farmer-Financed Irrigation: The Economics of Reform by Leslie E. Small