Expenditures for agriculture over the last decade has fallen significantly due to a number of factors. Most frequently cited are:
The potential for expansion of irrigated area remains limited: the water resources of many rivers have been fully exploited (for example, the Colorado River in Western USA, Yellow River in China, Godavery and Krishna Rivers in India and Oum Er Rbia River in Morocco). The competition for water resources between agriculture and the demands of an increasing urban population and more stringent environmental rules and regulations reduce the potential for expansion of irrigation.
World food prices are close to historical lows, reinforcing a perception of food sufficiency. The economics of irrigation development is less favourable than in the past two decades.
The unit cost of development increased as the most suitable sites were exploited. Irrigation construction costs have risen to two to three times their previous level.
Most investment is now for the rehabilitation of existing schemes. The cost of rehabilitation per hectare is thought to be considerably less than for a new project.
Less well known but equally important are adverse administrative and behavioural reasons:
Environmental concerns have discouraged investments in irrigation and dam construction, particularly among the international development banks.
Donors are responding to the new broad agendas of their organizations focusing on poverty alleviation, privatization and environment. Private and public sector development, health and education now receive more aid than traditional infrastructure.
Budget cuts for project identification, preparation and supervision contribute to the shift away from costly and time-consuming irrigation projects.
The perception of donors, supported by the international community of water resources and irrigation experts, is that the main cause of the poor performance of irrigated agriculture in many developing countries are deficiencies in management, institutions and policies, not the technology. This perception supports the view that fewer investments are needed for irrigation.
The consequence of declining investments for irrigated agriculture is a decline in rate of growth of irrigated areas and a backlog in rehabilitation and modernisation of existing systems. The global irrigated area grew by around 2 percent a year in the 1960s and 1970s, slowing down to 1.5 percent in the 1980s and hardly 1 percent in the 1990s. Irrigated area grew from 150 to 260 million hectares between 1965 and 1995 and is now growing at a very slow rate because of a considerable slowdown in new investments combined with loss of irrigated areas due to salinization and urban encroachment. It is estimated that about 50 million hectares of irrigated lands are affected by waterlogging problems resulting from poor irrigation management practices. About one million hectares go out of production every year because of salinity or sodicity.
A notable exception to the overall decline in irrigation investment is Saudi Arabia. The irrigated area in that country has increased three times from 0.5 to 1.5 million hectares between 1975 and 1992 resulting in the achievement of self-sufficiency in five agricultural commodities. However, the excessive use of irrigation water has resulted in the rise of shallow groundwater in some areas with negative impacts on the environment, human health and engineering facilities.
Box no. 1: Evolution of World Bank lending for irrigation
Irrigation accounted for 7 percent of World Bank lending for the 30-year period 1960-1990 more than any other single sector. Since then lending for irrigation by the World Bank has declined. Annual lending for irrigation accounted for only 2.5 percent of Bank lending in the 1990s and is still declining in the early 2000s.
The character of irrigation lending has been changing over time. Up to the early 1970s, emphasis was on infrastructure. The World Bank refused to lend for rehabilitation of irrigation, or of anything else. Rehabilitation was considered something that borrowers should do with their own resources and not truly an investment. To lend for it would simply encourage poor maintenance. Lending for irrigation has shifted progressively to rehabilitation associated with implementation of management, institutional and policy reforms. About two-thirds of recent international lending has been for systems which have suffered premature failure.
World Bank lending for irrigation