The Economics of Water Management in Developing Countries

The Economics of Water Management in Developing Countries

Problems, Principles and Policies

Edited by Phoebe Koundouri, Panos Pashardes, Timothy M. Swanson and Anastasios Xepapadeas

The increasing scarcity of water resources (in terms of quantity and quality) is one of the most pervasive natural resource allocation issues facing development planners throughout the world. This problem is especially prevalent in less developed countries where the management of this valuable resource has become a critical policy concern. This authoritative new volume outlines the fundamental principles and difficulties that characterise this challenging task. The authors begin by detailing the significant problems of water management which are specific to developing countries. In particular, they highlight the political economy of water management in the context of both pricing and institutional reform.

Chapter 2: The Political Economy of Institutional Reforms in Pakistan’s Irrigation Sector

Jean-Daniel Rinaudo and Zubair Tahir

Subjects: economics and finance, environmental economics, environment, environmental economics, environmental sociology, management natural resources, water


Jean-Daniel Rinaudo and Zubair Tahir* 2.1 INTRODUCTION Since its creation by the British at the end of the nineteenth century, the Indus basin irrigation system, which supplies water to a total area of 16 million hectares, has been managed by a public administration (the Provincial Irrigation Department), which is in charge of the design, operation, maintenance and resolution of conflicts in each irrigation scheme. It is now widely acknowledged that this irrigation bureaucracy has not adequately met the requirements of an administered system. It has increasingly relied on subsidies from the provincial budget, as the operation and maintenance expenditures have increased faster than the revenue collected from water charges (Strosser, 1997). The hydraulic infrastructure has not been properly maintained, leading to a poor overall performance of the system. The productivity of water has been stagnant, and the administrative discipline has rapidly deteriorated, resulting in widespread rent-seeking and corruption, together with illegal water trading at different levels of the system (Rinaudo, Strosser and Thayer, 2000; Rinaudo, Thayer and Strosser, 1997). In a context of increasing macroeconomic imbalances, international lending agencies, such as the International Monetary Fund (IMF) and the World Bank have urged the government of Pakistan to reduce its public expenditures in the irrigated agriculture sector. In 1993, the World Bank proposed to the government of Pakistan (GOP) a scenario for reform, suggesting a reduction in the role of the government and an increase in the participation of water users and other private sector institutions. This would * We...

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