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Planning Commission warns of a water crisis

The Planning Commission of Pakistan has urged water users to pay charges, which would finance the maintenance and functioning of the irrigation infrastructure. This would allow the uninterrupted supply of water for agriculture, which would avert water crises similar to the energy crises Pakistan is facing today. The canal irrigation system in Pakistan is financially unsustainable, as it recovers only an average of 24 percent of its annual overhaul and maintenance (O&M) costs, requiring an annual subsidy of Rs5.4 billion at the national level, stated a report by the Planning Commission of Pakistan on Canal water pricing (abiana) for irrigation in Pakistan. The Commission’s report expressed concern over the ever-widening gap between the rising O and M cost and the stagnant abiana (water charges per acre) recovery. “In future, governments will find it hard to continue with the increasing levels of subsidies, especially if the current financial crisis continues,” it noted. It should be noted that an even lesser gap between O&M cost and revenue cannot guarantee adequate maintenance and effective performance of the irrigation infrastructure, if a systematic approach, such as an asset management plan does not exist. The Commission’s study has identified several policy issues, including gross undervaluation of canal water for irrigation purposes in Pakistan. “Putting a price on canal water for agriculture to allow maximum benefit for society as a whole, remains one of the priority policy issues in Pakistan, especially at a time when pressure from the change in demography and climate is escalating,” the study added. A financially unsustainable irrigation system in Pakistan requires an annual subsidy of Rs5.4 billion to meet the O&M cost. This is the most critical policy issue confronting the world’s largest integrated irrigation system for decades. Inadequate collection of abiana is one reason behind the poor financial performance of the irrigation system in Pakistan. Country-wise, abiana recovery is merely 60percent of the assessed amount. More importantly the declining trend in both the Abiana assessment and recovery, when the canal irrigated area remains almost the same, with little variations during the period under discussion, is another issue requiring serious policy consideration. Improving the collection rate of the Abiana should be the priority for the provincial governments, which should take immediate measures to reduce the gap between recovery and assessment. Low pricing of canal water remains to be a hot issue at a time when prices of all other goods and services has increased manifold over the years. The study has recommended that policymakers should identify clearly defined goals (efficiency, cost recovery or both) in a specified timeframe to avoid confusion, as has been the case in the past. Most importantly, rationalizing abiana rates is certainly a necessary policy step to achieve financial sustainability of the irrigation system, particularly in the period of fiscal constraint that the country is experiencing. The goal of the future must be to reduce the prevailing 76percent gap between the O&M cost and the revenue from the abiana.The future policy of irrigation water charges should target cost recovery as a short term goal, while water resource conservation should be a long term aim, before the prices of water are driven high, reflecting its scarcity. Abiana rates (water charges per acre) need to be based on crop water requirements per acre, so that the water scarcity is reflected in the water charges, an incentive for farmers to use water efficiently for higher financial returns. According to the study, the provincial governments need to show strong commitment by formulating and implementing a policy of cost recovery to gradually reduce subsidized irrigation. A three-pronged strategy is suggested to recover the full O&M cost from water users. First, by rationalizing the abiana rates, especially the increasing rates of the high-delta crops such as rice, sugarcane and cotton. Second, by improving the abiana assessment process to cover all irrigated farms (using satellite and other technologies) and third, by ensuring 100 percent recovery of the assessed amount to meet the required O&M costs. In order to harness the farmers’ willingness to pay the increased abiana rates, ensuring the provision of a reliable and equitable irrigation water service of good quality, with an efficient irrigation management staff would be a pre-requisite. This could be done by transforming the irrigation departments from its current water distribution mindset into an accountable, service-oriented public agency. For financial sustainability of the irrigation infrastructure, all the four provinces need to develop an Asset Management Plan for levying water charges systematically to recover the actually needed O&M cost for the provision of the agreed level of water service to farmers.

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