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Do Incentives Still Matter for the Reform of Irrigation Management in the Yellow River Basin in China?
Release date：2014/6/30 Source： ccap
Do Incentives Still Matter for the Reform of Irrigation Management in the Yellow River Basin in China?Jinxia Wang Jikun Huang Lijuan Zhang Qiuqiong Huang
Under the pressure of increasing water shortages and the need to sustain the development of irrigated agriculture, since the middle of the 1990s, officials in the Yellow River Basin (YRB) have begun to push for the institutional reform of irrigation management. The major purpose of irrigation management reform is to increase the agricultural water use efficiency and also to promote the continuing growth of agricultural production.
Based on the panel data collected in two rounds (2001 and 2005) in four irrigation districts (ID) in the YRB, Prof.Jinxia Wang, Prof. Jikun Huang and Ms. Lijuan Zhang from the Institute of Geographical Sciences and Natural Resources Research (IGSNRR), Chinese Academy of Sciences (CAS) found that after the early 2000s, irrigation management reform has accelerated in Ningxia province, but no progress has been made in Henan Province. Until 2004, 21 percent and 30 percent of villages established WUAs or contracting management, respectively, to manage their irrigation systems for all samples. Although some improvement on management mechanism was observed, most irrigation management reforms are still nominal. More importantly, over the past several years, more WUA managers gave up the opportunity to establish incentive mechanisms, while more contracting managers preferred to establish incentive mechanisms. However, this trend differs by ID. The decline in the incentives established by the WUAs primarily occurred in WID-N and not in another ID.
Applying both descriptive statistics and an econometric model approach and based on data from two IDs in Ningxia Province, the results demonstrate that the use of incentive mechanisms to promote water saving is effective under the contracting management arrangement and not effective under WUAs. Specifically, providing incentives to contracting managers will significantly lead to the reduction of water use for both wheat and maize, but the same is not true for the incentives provided to WUA management. However, with a decrease in water use, although the maize yield will not be significantly influenced, the wheat yield will present a significant decline. Based on the assessment results for the early stage of reform by Wang et al. (2005), even when water use was reduced, the crop yields for both wheat and maize were not negatively influenced. These results imply that at the later stage of the reform, reducing water use by providing incentives to managers is at the cost of negative impacts on crop yields, particularly for those crops that are sensitive to the irrigation water supply, such as wheat. This relationship possibly explains why more WUA managers give up the opportunity to earn more money by establishing incentives.
Further analysis indicates that even when the contracting managers with incentives can earn money by saving water, this result does not necessarily benefit the entire village. The results show that in both Weining and Qingtongxia IDs in Ningxia Province, the marginal value of water productivity was much lower than the irrigation water price. Under the low irrigation water price, the reduction of water use for wheat will result in lost money for the farmers. More importantly, in the same ID, the money lost per hectare for farmers was lower than the amount earned by the contracting mangers. Therefore, the overall villages are the losers. However, if the IDs reallocate water to high value sectors such as industrial sectors, the overall ID will obtain a higher benefit due to the high water supply price for the industrial sectors.
Based on the analysis results, in the future, as the local governments in the YRB continue to foster the reform of irrigation management, they must design win-win supporting policies to ensure the healthy development of the reform. On the one hand, to achieve the goal of water saving to resolve the increasing water shortage issues, establishing incentive mechanisms within the reformed institutions can still be treated as an important policy alternative. On the other hand, the policy makers also cannot omit the potential negative impacts of incentives on agricultural production and the economic benefits for farmers. To offset the potential money lost by farmers due to the reduction of water use, the policy makers should consider to use subsidy policies to offset farmers’ economic losses due to reduction of water use. Of course, along with irrigation management reform, some effective measures for increasing the water productivity of agricultural production are urgently needed by farmers, such as new crop varieties (such as drought resistant varieties), new planting and cultivation systems (such as conservation agriculture, new patterns of crop rotation) and water saving technologies (such as wetting and drying irrigation approach, plastic film mulching, surface and groundwater pipe) that can help increase the utilization efficiency of agricultural inputs and offset the negative impacts of water use reduction on crop yields. In addition, to keep the reform sustainable, local governments also need to consider how to use water right policy to reallocate water to higher value sectors that will increase the overall benefit of the reform to the IDs or even larger regions. The policy makers in the YRB must find ways to balance the trade-off between saving water and increasing agricultural productivity and economic benefit over the long term. In addition, as results revealed that at the later stage of reform, the water saving effects have tend to decline. Therefore, when pushing the continuing reform if irrigation management, policy makers also can significantly increase the irrigation fee. When the irrigation fee is high enough and even higher than the average marginal water productivity of crop production, the farmers lose their incentive to use more water because a reduction in water use will make them better off. Of course, if we want to reduce water use through increasing irrigation fee policy, how to provide subsidy policies to offset farmers’ economic losses is also necessary. Finally, setting up some education programs for farmers to improve their understanding on the necessary of improving water use efficiency and increasing their capacity to use some innovative practices or technologies are also necessary.
The study has been published in Journal of Hydrology (Jinxia Wang, Jikun Huang, Lijuan Zhang and Qiuqiong Huang, 517: 584–594).
Download File:Watermanagement_Hydrology_JinxiaWang_2014.pdf
