1. Challenges and Developments in
Financing Irrigation and Drainage
Sector
Uma Lele
(with inputs from Tushaar Shah, Mohamed Ait Kadi,
Herve Plusquellec, Richard Reidinger)
A Keynote Presentation prepared for the Plenary
Session on sub theme of the ICID First World Irrigation Forum,
Mardin, Turkey, September 30, 2013.

2. 1. Agricultural Intensification is the key
2. Water is critical to intensification
3. Increasing water use efficiency and water productivity is of utmost
importance, in the context of total factor productivity
4. Financing of Irrigation and Drainage Needs New Paradigms
5. Modernize surface irrigation. Do not just rehabilitate
6. Modernization is no silver bullet
1. Keep Service Delivery to the Clients at the Center stage
2. Make modernization contextual due to immense diversity
among regions and countries and within countries.
3. Do not copy blindly –innovate, adapt, monitor, evaluate and
disseminate
7. Improve quality of service s to farmers.
8. Develop national capacity to deal with complexity.
Key Messages

3. Information Technology Revolution
Satellite Imagery
Precision Farming
Sprinkler Irrigation Systems
Drip Irrigation
Modernization of Surface Irrigation Systems Catching Up?
Huge Advances in Irrigation Technology

4. 4
0
500
1000
1500
2000
2500
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
BaseYear1970=100
GDP Growths by Region
(constant 2000 US$)
(1970-2011)
East Asia & Pacific (developing only) High income
Latin America & Caribbean (developing only) Middle East & North Africa (developing only)
South Asia Sub-Saharan Africa (developing only)
Source: WDI and Global Development Finance, World Bank
Note: MENA--data is not available for the year 2011
Global Growth Is Driven by All Developing Regions since 1990

5. Highly Changed Global Environment
• Globalization—international trade in food, integration of markets
• Huge Technological Change—IT,
• Land and Water Grab
• Biofuels
• Declined international assistance and declined food aid
• Increased Role of Private Sector Investments?
• Public Private Partnerships—Boutique projects
• for High value crops
• Climate related investments— Some supportive of watershed protection
• PES,
• Mitigation
• Adaptation
• Best of Science

6. FAO Financing Projections to Meet Global
Food Demand to 2050
• $ 4 Trillion Investment in Agriculture needed by 2050
• $ 1 Trillion in irrigation and drainage-85% in
depreciation/replacement
• To Feed ---9 Billion+ in 2050:
• Cereal Production (Net of Biofuels) Increase by 60% over 2005
level to meet demand growth
• 1.1 percent grow the needed annually down from 2.2 percent
in the past 4 decades
• Diversification of diets –some water intensive, some water saving
• Almost all Growth in Food Demand Will be in Developing Countries
• Reduction of Waste ?

7. Real Agricultural Prices Have Fallen Since 1900, Even as World
Population Growth Accelerated
Source: USDA, Economic Research Service using Fuglie, Wang, and Ball (2012).

8. Sources of Investment in Agriculture
Source: The State of Food and Agriculture 2012.

9. Sources of Growth in Investments in Irrigation and
Drainage—Some Examples
National Public
Investments in agriculture
 China-$600 billion over 10
years
 India-$70 billion in 5 years
 Turkey
 Morocco
International Assistance
• World Bank
• Asian Development Bank
Private Investments
• Farmer Investment
• India--half of the public
sector-1950-2011 of $ 117 to
$ 334 billion
• China—Water Users’
Association—20 to 30 pc
• Private Investment
• PPPs <$10m?
• Private Industry--
unknown-

10. 10
Source: International Water Management Institute analysis done for the Comprehensive Assessment of Water Management in Agriculture using the Watersim
model.
Water Scarcity will Increase Food Insecurity
Areas of Physical and Economic Water Scarcity

11. Global Hunger # of
Undernourished by Region
South
Asia
304
East Asia
167
Sub-
Saharan
Africa
234
Rest of
the
World
163
2010-12
Total=868 million
Population Living in Poverty
by Region
South
Asia
506.77
East Asia
250.9
Sub-
Saharan
Africa
413.73
Rest of
the
World
43.58
2010
Total=1214.98 million
Data Source: The State of Food Insecurity in the World 2012
Source: http://iresearch.worldbank.org/PovcalNet/index.htm?1
(using 2005 PPP and $1.25/day poverty line)

12. Agricultural Total Factor Productivity (TFP) Index Growth by Region (1961-2009)
0
50
100
150
200
250
300
BaseYear1961=100
Source: Fuglie, Wang and Ball 2012
Growth is Lagging in Sub-saharan Africa and South
Asia
East Asia
MENA
South-East Asia
LAC
Oceania
Sub-Saharan Africa
South Asia

13. Average Annual Change in Agricultural Capital Stock per Worker
in Low- and Middle-income Countries (1980–2007)
Source: FAO 2012.

14. Actual and Projected Growths of Area Equipped for Irrigation by
Region (1961-2050) (Base Year 1961=100)
0
50
100
150
200
250
300
350
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
2035
2037
2039
2041
2043
2045
2047
2049
Sub-Saharan Africa South Asia East and South-East Asia
Latin America and Caribbean Near East and North Africa
Source: FAO, 2013.

15. Arable Irrigated Land: Equipped and in Use (million ha) (1960-
2050)
Source: Alexandratos and Bruinsma 2012.

16. Total Area Equipped for Irrigation by Region(1000 ha)(1961-2011)
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
Source: FAOSTAT
Sub-Saharan Africa Northern America
Latin America and Caribbean Eastern Asia
South Asia South-Eastern Asia

17. Total Area Equipped for Irrigation
(Brazil, China, India and Indonesia)
(1000 ha) (1961-2011)
0
10000
20000
30000
40000
50000
60000
70000
Brazil China India Indonesia
Growth of Surface and Ground Water
in India (1951-2007)
Source: FAOSTAT Faures and Mukherji 2011

18. Growth of Public Irrigation Investment & Stagnant Canal Irrigation
Area in India
0
6
12
18
24
30
36
42
0
10
20
30
40
50
60
1960 1970 1980 1990 2000
Netirrigatedarea
(millionha)
Expenditure
(billionUS$,in2000prices)
Trends of public expenditure in major and medium irrigation
and net irrigated area under different sources in India
Expenditure Tanks Canals Groundwater
Groundwater
Irrigated Area
Groundwater
Canal
Irrigated Area
Tank
Irrigated Area
Expenditure US$
(2000 prices)
Source: Strategic Analyses of the National River Linking Project (NRLP) of India, Series 5. Proceedings of the Second National Workshop on Strategic Issues in Indian Irrigation.
International Water Management Institute 2009.

19. Distribution of Electric and Diesel Pump-sets in South Asia
Source: Tushaar Shah (2009) Climate change and groundwater: India’s opportunities for mitigation and adaptation.
+3 million of Drip
Irrigation

20. Total Area Harvested for Cereals (million
ha) (1961-2012) (Brazil, China, India and
Indonesia)
0
20
40
60
80
100
120
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
Brazil China India Indonesia
Total Cereals Yield (hg/ha) (1961-2012)
(Brazil, China, India and Indonesia)
0
10000
20000
30000
40000
50000
60000
70000
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
Brazil China India Indonesia
Source: FAOSTAT

21. Share of Agriculture & Allied Sector in Total Gross Capital
Formation (Percent) in India (1950-51 to 2008-09)
0
5
10
15
20
25
30
1950-1951
1952-1953
1954-1955
1956-1957
1958-1959
1960-1961
1962-1963
1964-1965
1966-1967
1968-1969
1970-1971
1972-1973
1974-1975
1976-1977
1978-1979
1980-1981
1982-1983
1984-1985
1986-1987
1988-1989
1990-1991
1992-1993
1994-1995
1996-1997
1998-1999
2000-2001
2002-2003
2004-2005
2006-2007
2008-2009
Public Sector Private Sector Total
Public + Private Private
Public
Source: Central Statistical Organization (CSO), India.

22. Total ODA and ODA to Agriculture + Forestry + Fishing, Forestry (Only) and
Agricultural Water Resources [Current Prices (USD billions) (1967-2011)]
0
20
40
60
80
100
120
140
160
180 1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Agriculture, Forestry, Fishing Only Forestry Agricultural Water Resources Total ODA
Source: http://stats.oecd.org/Index.aspx?DatasetCode=TABLE5
OECD Aid to Developing
Countries

23. 0
5
10
15
20
25
30
35
40
FY60
FY61
FY62
FY63
FY64
FY65
FY66
FY67
FY68
FY69
FY70
FY71
FY72
FY73
FY74
FY75
FY76
FY77
FY78
FY79
FY80
FY81
FY82
FY83
FY84
FY85
FY86
FY87
FY88
FY89
FY90
FY91
FY92
FY93
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
Declining Share of Aid to Agriculture in
ODA (1960-2013)
Share of Agriculture (%) (IBRD+IDA) Share of Agriculture (%) (ODA)
Establishment of the CGIAR
1972
McNamara Speech 1973
World Bank
ODA
WB’s 1997 Vision to Action
WB 2002 Reaching the Poor
WB 2008 WDR
Source: http://stats.oecd.org/Index.aspx?DataSetCode=CRSNEW# World Bank

24. Share of IBRD-IDA Total Commitments by Agricultural Sub-sectors
(Real=Nominal/MUV) (MUV Index 2000=100) (1960-2011) (%)
(C+E+N) Agric.
Extension & research
7%
(F+I+J) Animal
Production
2%
(G+L+M)Crops
8% (O)Forestry
5%
(H)Irrigation &
Drainage
32%(P+Q)General Ag.
11%
(R)Public Admin-
Agriculture
1%
(K+S+T)Agric.
Marketing and Trade +
Agro-industry
7%
Agriculture adj.
15%
Agricultural cred
12%
Total=116.6 US$ Billions
Source: World Bank

25. 0
5
10
15
20
25
30
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
NumberofIrrigation&Drainageprojects
Commitments(US$Billion)(Real=Nominal/MUV)
MUV Index 2000=100
Number of Irrigation & Drainage Projects Funded by IBRD-IDA and
Total
Commitments to Irrigation & Drainage (US$ Billion)
(Real=Nominal/MUV)
(1960-2011)
Number of projects IBRD-IDA Commitments to Irrigation & Drainage
Source: World Bank

26. 0
1
2
3
4
5
6
7
8
9
10
0
0.2
0.4
0.6
0.8
1
1.2
1.4
NumberofWaterSectorProjectswithI&DComponent
WaterSectorLoansandGrants(US$Billion)
(Real=Nominal/MUV)
Number of Water Sector Projects with I&D Component Funded by ADB
and
Water Sector Loans and Grants with I&D Sector (US$ Billion)
(Real=Nominal/MUV) (1969-2011)
Number of projects
Total Water Sector Loans and Grants with I & D Component (Billion USD)
Waterpart (Billion USD)
Source: Asian Development Bank

27. Examples of Modernization
Morocco
Vietnam
China
Peru
Chile
Turkey
Indonesia?
South Asia?
1. Volumetric Water Charges
2. Sophistication of Engineering
not enough
3. Sophistication of Organization
4. Water User’s Associations
5. Increased Water Charges
6. Training
7. Incentives
8. Dedicated Staff
9. Investments
10. Institution
11. Good Governance

28. Africa now a growing recipient of ODA (Commitments) to
Agricultural Water Resources
by Region (Current Prices) (USD billions) (1995-2011)
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Europe Africa North and Central America
South America East Asia South and Central Asia
Middle East
Source: http://stats.oecd.org/Index.aspx?DatasetCode=TABLE5.

29. To Improve Management
 Develop a reliable data for water resources
and make information public;
 Institute a transparent system of
performance benchmarking;
 Establish a performance management
culture
 Raise Irrigation Service Fees (ISF)
increasing it closer to the marginal value
product of irrigation;
 Improve ISF collection to 80-90 per cent of
the assessment; ensure that the operating
turn-over of an irrigation system is at least
10-12 percept of capital investment;

 Establish and levy a ‘conjunctive use’
charge on groundwater irrigation
 Link Operation and Maintenance budgets of
irrigation systems Irrigation Service Fee
collection;
 Develop Water User Associations,
 Hive off successful irrigation systems as
autonomous farmer irrigation companies
with perhaps contracts with private sector for
delivery of produce;
 Improve irrigation service delivery, including
the management of the main and delivery
systems which includes:

30. To Modernize
Improve Performance diagnosis through tools such as
RAP and MASCOTTE
Undertake Training in modernization at ALL levels
including academics, training institutes, consultants,
contractors, governments, project managers. Systems
operators.
Invest in modernization and Implement rather than
considering rehabilitation with modernization

31. “ I only hope that (my failure to speak out
three decades ago) will encourage others to
be bolder so that policies and practice can be
better grounded in realities and ………. offset
the professional, institutional and personal
forces that so easily distort perceptions and
generate and sustain misleading and
damaging myths. We need not just to
struggle to know reality. We need whistle
blowers. And we need them to blow more and
a good deal louder than I did”–
Robert Chambers