Economic and Land Use Impacts of Improving Water Use Efficiency in Irrigation in South Asia

Abstract

This paper modifies and uses an advanced computable general equilibrium model coupled with biophysical data on land and water resources by Agro-Ecological Zone (AEZ) at the river basin level to examine the economy-wide consequences of im-provements in water use efficiency (WUE) in irrigation in South Asia. This is the first time the benefits of such improvements have been evaluated in an economy-wide context. It shows that such improvements increase production of food items, enhance food exports, and significantly improve food security in South Asia. Improvement in water use efficiency also leads to lower food prices, provides the opportunity to extend irrigated areas, decreases demand for cropland, and enhances reforestation. Im-provement in water use efficiency in irrigation also generates important net GDP gains across the South Asia region. Investments in improved WUE of up to 40% can be economically justified in Bangladesh, India, and Sri Lanka. However, in Nepal, for an improvement of more than 20% in WUE, the economic gains are smaller than costs from the associated investments. In Pakistan and rest of South Asia, an improvement in WUE of up to 30% appears to be economically profitable.