In an article published last year, World’s Bank’s Lead Water Resource Management Specialist opined that Pakistan’s water crisis is largely a demand-side issue, noting that only 35 countries have more renewable water.
Although it is true that per capita water availability has dropped to 903 cubic metres in absolute terms, the number represents high inequitable distribution of the resource. National Water Policy acknowledges that 95 percent of total available resource is utilized by irrigated agriculture, compared to global average of 70 percent (FAO).
Despite competing narratives peddled in popular media, consensus exists across the policy making spectrum that the fault lies with the financially unsustainable irrigation infrastructure. The supply-based canal to farmgate irrigation system operates on a “use it or lose it (to downstream)” policy, leading to up to 60 percent loss by drainage return to seawater and seepage to ground water; latter is abstracted by farmers at a higher cost through tube wells.
Are the provincial governments responsible for failing to maintain the canal system? A 2012 Planning Commission on “Canal Water Pricing” answers that the Abiana charges recover on average less than 24 percent of the annual O&M cost, an estimate that has been repeatedly corroborated by private sector researches conducted by IMF & Asian Development Bank. An annual subsidy upward of Rupees 8 billion is spent by provincial governments just to keep the system going.
To this end, a case study was conducted in Rakh Branch area of Punjab by the Center for Advanced Studies in Agriculture & Food Security at University of Faisalabad. The paper was published earlier this year and has made some interesting findings. It reports that “under the flat rate system, water charges are fixed per hectare of area sown regardless of the type of crop being irrigated”. During 2016, flat rates of Rupees 123.55 per hectare and 210.1 per hectare were charged for Rabi and Kharif crops, respectively.
To calculate water productivity based on average crop yield of wheat, sugar cane, and rice farms in the case study area, the researchers considered total crop production and compared them with average water consumption by each crop. The findings are mind boggling: average irrigation bill for 3 crops per cubic meter of water paid by farmers to Punjab Irrigation Department stands at less than 10 paisas! To put things into perspective, 1 cubic meter equals 1,000 liters.
Without going into technical details of mathematical models used, we replicate below the table calculating annual proposed prices of water based on the type of crop:
If the proposed price for full recovery of irrigated water seems exorbitant, consider another finding: compared to modify rates, it costs Rupees 3,113.6 to abstract same quantity of groundwater, lost to seepage in the first place due to poor canal lining.
The stated pricing mechanism seems to have obvious implications for country’s agriculture economy. However, the 2012 Planning Commission report had noted that the price elasticity of canal water demand is very low, meaning that “increasing water charges to some extent will not impact water use and cropping pattern significantly”. Hence, meaningful changes to water pricing are broadly recognized as the most important variables in meeting the water shortage.
Yet, the National Water Policy barely touched upon the subject and placed “adequate abiana pricing” on 17th position among its long list of policy objectives. The consensus at policy level is clearly failing to translate into political action.
In the next article, this column will examine the possible impact of proposed pricing mechanism on current cropping pattern and farmer’s income, and propose mitigative steps to make the action politically acceptable.
The next column in this series shall cover the impact of increased abiana rates on commodity market.