CASE STUDY FROM CHINA

SURVEY ON IRRIGATION MODERNIZATION

ZAOHE IRRIGATION DISTRICT  

Prepared by Peter Mollinga and Gao Hong

December 2002

CONTENTS

1 PART A: DESCRIPTION OF THE SYSTEM

2 PART B: MODERNISATION PROCESS

2.1 Reasons for system modernisation
2.2 Funding of the modernisation
2.3 Modernisation of the physical infrastructure
2.4 Institutional modernisation: the Water Supply Company
2.5 Institutional modernisation: Water Users Associations
2.6 Institutional modernisation: water fee reform
2.7 Water fee collection
2.8 Training

3 PART C: IMPACT OF MODERNISATION

3.1 Secondary canal No. 7: basic features
3.2 Secondary canal No. 9: basic features
3.3 Irrigation characteristics 1991-2000
3.4 The problem of data quality
3.5 Water distribution
3.6 Water Users Associations
3.7 An election meeting
3.8 Water fees
3.9 Environmental impact

4 PART D: CONCLUSIONS

5 REFERENCES

ZAOHE IRRIGATION DISTRICT

1 PART A: DESCRIPTION OF THE SYSTEM

The climate is moderately sub-humid with an average yearly precipitation of 900 mm. 70% of the rainfall is concentrated in the period from June to September. The average temperature is about 14.1 degrees Celsius and the annual potential evapo-transpiration is approximately 1530 mm. The average monthly rainfall for the years 1991-2000 is presented in figure 1.

Figure 1: Average monthly rainfall in Zaohe ID, 1991-2000

Irrigation starts in April and ends in September each year. The staple crops are rice and wheat. Fruits, cotton, lotus root, soybean and vegetables can also be found in this Irrigation District. Normally the first irrigation is started around April 20 to raise rice nurseries. At the beginning of June it is the time for the wheat harvest, and transplanting of rice starts immediately in the same plot. The last irrigation period is at the beginning of September. The time for the rice harvest is around 20 September. Before October 20 wheat has to be planted in the field. The land is fully occupied with rice and wheat year-round.

Figure 2: Map of Zaohe irrigation system

2 PART B: MODERNISATION PROCESS

2.1 Reasons for system modernisation

The main reasons for the modernisation of Zaohe irrigation system were very similar to those for irrigation reform in P.R. China in general.

The decline of the physical infrastructure combined with the poor construction quality of the 1960s and 1970s.

The lack of funds for investment in the physical infrastructure. With the reforms of the 1980s, government capital investment in agriculture went down dramatically. This also implied reduced funding for irrigation infrastructure.

Government policy on irrigation reform was strengthened in the 1990s.

Dissatisfaction with the mixing of water fees and other fees at the village level, and more generally, complex and unclear management responsibilities for irrigation involving both different levels of the civil administration and the line department.

As far as we know no performance evaluation was done prior to modernisation. Before system modernisation, gates and pumps as well as water level observation were controlled and measured by hand. This resulted in high labour cost and low accuracy of water measurement. There were no management offices along the canals; the office on the main canal was very simple with rather low working efficiency. Blocking of canals reportedly happened frequently.

From 1998 to 2000, the total investment was 39.98 million Yuan¹ from governments, of which 16 million Yuan was from the central government; 7.4 million was derived from the provincial government and 16.56 million contributed by the local governments. Zaohe has got 4 million Yuan loan from the World Band for supporting the physical modernization and irrigation reform. Farmers were mobilized to contribute labour .

The main elements of the physical modernisation of the system under the combined funding of the World Bank and the Chinese government were 1) lining of canals, 2) construction/upgrading of division structures including installation of measuring devices.² The percentages of lining are given in the table in Part A. The main canal has been fully lined, the secondary and tertiary canals partially. The work seems to have been implemented effectively - all concerned report that it is a big improvement. The gauge readings are sent to the main office by telephone. System managers report that they want to install an electronic link of the gauge readers with the main office.

The pictures below give an idea of the work undertaken.

18.3 yuan =1 US dollar

2In more detail, the components of the modernisation included: a) canal lining; b) rebuilding of four large gated structures on and rehabilitation of the main canal; c) 15 bridges on the main canal, 68gated structures on secondary canals and 2 culverts and 7 electric pumping stations; d) 28 management office rooms along canals; e) automatic water measurement equipment at the head gate of secondary canals; and f) equipment for automatic monitoring.

Picture 1: Main canal with secondary offtake

Picture 2: Lined secondary canal

Picture 3: Box with automatic gauge recorder

In the pre-reform situation the Zaohe Irrigation District managed the Zaohe irrigation system. Zaohe ID came under the leadership of the Suyu County Water Resource Bureau. With the reform, this set-up was changed. In October 1997 the Suqian Dayu Group was registered in Suyu county as a company. The president of this Group was appointed by the county government. The scope of the operation of the Group includes rural water supply, infrastructure construction, water management, trading in construction material and other commercial activities.

A Water Supply Company (WSC) is one of the companies under the Dayu Group. This WSC has been established following the model of SIDD (self-managed irrigation and drainage district) recommended by the World Bank. The WSC supplies irrigation water to farmers and is also responsible for main canal operation and maintenance, and for water fee collection in the Zaohe irrigation system. Other companies in the Dayu Group focus on economic diversification and have developed other businesses for generation of income from other sources.

Zaohe ID and WSC are two different names for the same organisation, headed by the same manager. The organisational linkages are shown in the diagram below.

“A” indicates that the vice Party Secretary of the Water Resource Bureau in Suyu County is also the president of Suqian Dayu Group.

“B” indicates that the director of Zaohe ID is the same person as the president of Dayu Group.

“C” indicates that 140 staff have been shifted from Zaohe ID to the WSC.

“D” means that the other 55 staff have been shifted to enterprises or encouraged to do construction work in the irrigation system and other business, such as lining canals, trading in construction materials and/or managing small shops.

The WSC staffs earn their income from the water fee paid by farmers for a period of eight months per year³. The staff cannot receive a salary from the farmers' water fee payments in the non-irrigation season, when no irrigation service is provided. In these four months without irrigation, all staff in the WSC joins the teams to do the construction work in the irrigation system. However, the income derived from water fees has been pooled with the income from other businesses (economic diversification activities), and a regular monthly salary is paid to the staff.

Because the staff of Zaohe ID have been shifted to the WSC and other companies or encouraged to do their own business, it would seem that Zaohe ID could be abolished as an institutional entity. However, the government only allocates certain investment funds to irrigation districts and not to companies. There are also limits to the profit-making capacity of water supply companies, given that there are compelling reasons to keep water fees at levels close and not too far above coverage of operation and maintenance costs, and thus keep production costs for farmers low.

3It was 9 months in 1999. The income derived from water fee each year has to be agreed by the county government.

The financial accounts of Zaohe ID and the WSC are independent. The WSC has its own accountant and the WSC financial account only deals with the water fee. The engineering and construction work in the irrigation system can only be done through the Zaohe ID financial account.

Between May 1998 and May 1999, 18 WUAs have been established in the Zaohe irrigation system, following the hydraulic boundaries of secondary canals and the township administrative boundaries. 78 sub-WUAs have been set up based on the village unit and 666 water user teams have been formed, totally with 44600 water users (SIDD working report, 2000).

From the formal regulations of the WUA, the following can be derived.

1. There are 3 members in one WUA board group, which includes one chairman and two vice-chairmen.
2. Chairmen of WUAs should be elected by water users as follows:
   - water users elect representatives in an election meeting attended by water users;
   - representatives elect the members of the board group.
3. The board group employs one accountant and one engineer.
4. Working conferences of water users should be held at least twice a year.
5. Water fees will be collected and paid to the WSC.

In order to inform farmers about WUAs, the WSC in 1998 wrote an introduction on WUAs and explained which water fee was going to be collected .The WSC asked the WMS (Water Management Station) to deliver this document to each individual household.

Further details on the WUAs are discussed in Part C.

Water fee reform in Zaohe ID has the following elements: increase in the fee to achieve a higher level of cost recovery, and changes in the mode of calculation and collection leading to greater accountability and transparency. The water fee collected from farmers consists of three parts in Zaohe ID: the water resource fee, the WSC water fee and the WUA water fee.

Water resource fee The Water Resource Bureau in Suyu County collects this through the township government. The procedure of collection is farmers ? village ? township government ? WRB. The rate is 12 yuan/mu. The water resource fee is kept partly in the WRB and is partly handed up to provincial level through Suqian City.

WSC water fee The components of this fee are given in table 1.

Table 1: The components of WSC water fee, Zaohe ID 1998-2000 (in 1000 yuan )

Source: Zaohe ID, 2000

Table 2 shows that the unit cost of water is calculated by dividing total operational cost by total water use in a year. This expresses the approach that water fees should be kept close to actual costs. The cost is not fully recovered as yet. This way of water pricing provides only an indirect incentive for water saving.

Table 2: Calculation of water rate and water supply cost

1) Considering the farmer's payment capacity, the cost of water fee collected from farmers at present excludes depreciation and pumps maintenance.
Source: Zaohe ID, 2000

WUA water fee The WUA water fee is used for the operation of the WUA It includes the items listed in table 3, which gives the situation in secondary canal No. 7 as an example.

Table 3: Calculation of water rate in No. 7 WUA in 1999

Source: Zaohe ID, 2000

In 1999, the total water quantity supplied to No. 7 secondary canal was 11.58 million m 3 , so the water fee in this WUA was 80.8/11.58 = 0.7 cent/m 3 . According to the principle of gradually approaching the cost of water supply, this WUA charged a water fee in 1999 of 0.2 cent/m 3 . For collection from farmers, it was clubbed with the WSC water fee.

The collected water fees from farmers are shown in table 4 (excluding the water resource fee).

Table 4: Collected water fee from farmers (cent/m 3 )

Source: Zaohe ID, 2000

The WSC water fee is the same for each WUA, but the WUA water fee can vary. As a result, the water rate charged from farmers can be different in different WUAs. The variation was 0.7 cent in 1999. In some villages the water fee is collected per capita (which translates into a payment per unit area because land is distributed according to family size). Because other fees are collected according to this principle, it is easy for farmers to accept a water fee on per capita/area basis as well. In Wanglin village in No. 7 canal, the water fee was 59 and 54 yuan/mu in 1999 and 2000. In the No. 9 WUA the fees were 64 and 59 yuan/mu in 1999 and 2000.

Before the reform the water fee was charged according to the agricultural population and paid to the township government through the village. Sometimes township government or villages used the occasion of water fee collection to charge other fees simultaneously. After the WUA establishment, the water fee is charged according to the rice area and is paid to the WSC through the village, and no longer to the township government. The situation of charging other fees together with the water fee has been reduced.

Normally, the water fee is charged twice a year. The first occasion is at the end of May, the time of wheat harvest. This time 80% of total estimated water fee in whole year should be charged. The remaining part is charged before September 20, the time of rice harvest.

Staff of the WSC and members of the WUAs should collect the water fee. However, the mode of water fee collection varies across villages. In some villages, team leaders collect the water fee from farmers. In other villages farmers go to the village committee office to pay their fee after a broadcasted announcement that mentions the amount of water fee that should be paid per mu. Because the water fee of WSC and WUA are collected together, the whole water fee collected from villages has to be delivered to the WSC. The WUA water fee is returned back to the WUA later. Very few farmers were found who knew the exact details of their water fee. They follow the request for payment of the fee by the village committee, provided the amount of the fee is the same as that of their neighbours.

Zaohe has sent representatives to participate in some national seminars on the topic of PIM in some Irrigation Districts such as in Tieshan ID, Hunan province and Zhanghe ID, Hubei province. In May 1999, the PIM seminar organised by the China Irrigation District Association was held in Zaohe ID. 116 participants from 22 provinces attended this seminar. It provided a good opportunity for Zaohe staff to learn experiences from other IDs and provinces. However, we have not found documentation about training courses in PIM in Zaohe. Reportedly, some misunderstanding of leaders in Zaohe of the concept of PIM has implied inadequate training courses on PIM, within a process of vigorous irrigation reform implementation.

Zaohe irrigation system is considered to be a very successful case of irrigation reform by both the Chinese government and the World Bank. It is a system that is frequently visited by system managers and farmers from other parts of the country (as well as foreign visitors), and there has been discussion on establishing a training centre on participatory irrigation management in this system. In terms of how representative the system is for the modernisation and reform process in general, this system would thus be on the `better' side. The SIDD approach is being practised in other parts of P.R. China also, but in general it should be observed that there is considerable diversity in the way institutional reform of irrigation management is done. However, in all cases physical rehabilitation of the systems is a core element. The technologies adopted also seem to be fairly similar: concrete lining of canals, improvement of division structures, and provision of measuring devices. In terms of physical rehabilitation Zaohe irrigation system is thus fairly representative.

To assess the impact of the modernisation/reform, we look at two secondary canals in detail: No.7 and No.9 (field data was collected between June and September 2001).

No. 7 secondary canal is 5.1 km long, and is fully lined. The discharge can be measured with an automatic water level recorder at the beginning of the secondary canal. Each hundred meters, steps in the side of the canal can be found which are mainly for farmers to wash their hands or feet and also for women to wash clothes. Halfway the length of the canal, a big gate has been built in May 2001 for control of the water level, because sometimes there is problem to get water at the upstream side. The concrete road along the canal is good.

There are 20 tertiary canals in total in this secondary canal. No fixed flumes are found in any tertiary canal. The earthen tertiary canals have considerable growth of grass and weeds. It is difficult to measure discharges in such tertiary canals.

No. 9 secondary canal is longer than No. 7 canal. Only about 3 km is lined. This canal benefits water users in 11 villages. Five villages are located at the upstream in Caiji township, and six villages are in Genche township. In Genche township many farmers have their companies to process waste plastic materials. The dirt road along the canal is rather bumpy. Though farmers are not allowed to grow any crop on the canal banks, because it negatively affects bank stability, soybean is found on the inside of both banks of this canal.

There is one lined tertiary canal in this secondary canal. It is at the tail end. The condition of the tertiary canals is complicated. They are not only full with grass and weeds, but also have pools or ponds at their beginning.

The water quantity, water fee and irrigated area in the main canal and secondary canals No.7 and No.9 for the last ten years are given in table 5. The Zaohe Irrigation District Office provided the data.

Table 5: Irrigated area, water quantities and water fee in the main canal and secondary canals No. 7 and No. 9, Zaohe irrigation system, 1991-2000

Source: Zaohe ID office

These statistics suggest that since the start of the reform and physical rehabilitation of the system, the irrigable area has increased, the overall and per unit area water use has decreased, the water fee per unit areas has gone down, while total fees collected have remained more or less stable. Collection rates have gone up.

With regard to water use in the system, it should be kept in mind that this is highly sensitive to the yearly rainfall, as the irrigation period and the rainy season coincide.

Some figures given above, such as water fee and irrigated area, show considerable discrepancies with figures obtained from other sources, such as farmers or chairmen and accountants of WUAs. Agricultural information obtained from the WUA chairman in secondary canal No.7 is given in table 6.

Table 6: Basic agricultural information for No. 7 secondary canal in 2001

Source: the chairman of No. 7 WUA .

-7 villages have been combined into 4 villages recently.
-The winter wheat area (not irrigated) is the same as the rice area; wheat is planted in rice fields immediately after the rice harvest

Yet other figures can be derived from other reports. The irrigated area of secondary No.7 was about 12378 mu in 1999 according to the SIDD working report (2000). The total irrigated area in table 6 is close to 10,500 mu (2001). In our field research we were unable to synchronise the different figures for irrigated area.

The working routine in the Zaohe ID/WSC starts with a morning meeting around 6:30 am every day. In principle, all staff in the ID/WSC office has to attend the morning meeting. Normally the agenda of the morning meeting covers oral working reports and problems encountered during the previous day, and the work program and irrigation scheduling of the current day. There is an irrigation rotation schedule in this system, determined by the Director/President's based on a day-to-day evaluation of the situation in the system. Water distribution is centrally controlled and implemented on the orders of the system manager.

When there is water in a secondary canal, all intakes of tertiary canals are opened at the same time. Farmers go to their field to irrigate their plot themselves after getting the news from the team leader or neighbours. Sometimes, the village committee announces that farmers can irrigate their plots through village broadcast.

We were told that 48 current meters have been bought for measuring discharges at tertiary level. But figures are not available. During the field research in No. 7 and 9 secondary canals, nobody was found measuring discharges at any tertiary canal using these current meters.

Some other evidence was collected during our field visits. We interviewed a person who was responsible for opening and closing the gate of Jiucheng tertiary canal in No. 7 secondary canal. He is a farmer of middle age. He knows the irrigation performance in this tertiary canal very well. He was a temporary staff in Wangguanji Water Management Station for control of this tertiary canal. Because he did not receive the salary in time, he resigned from his job and only does farming work at home. He said that he opened the gate when there was water in the secondary canal. After checking in the field, he closed the gate. Before the lining of No.7 secondary canal, it took about 2 or 3 days from opening to closure of the gate. After lining of the canal, water can be obtained in a very short time. There was no water scarcity problem even before the improvement of this secondary canal, but irrigation took longer.

Only a few farmers were found in the field for irrigating their plots after almost 20 hours of water supply in No.9 canal. At the downstream of No. 9 canal, an old farmer with a plot at the tail end of the tertiary canal told his plot had not got water yet. He said that he can only get water when the head part of the tertiary canal finishes irrigation. He was not going to block the intake after his irrigation, although the head part had got enough water. We asked him if he has a water scarcity problem, “ no water scarcity, sometimes I get water late, anyway, I can get enough water ” he said. At the beginning of this tertiary canal, there is an aqueduct to transport water from the secondary canal to cross a big ditch, and the water spilled out from the aqueduct. It seems that there is enough water at the downstream part of this secondary canal.

To conclude, after the physical rehabilitation of the system there seems to be no problem in getting sufficient water to farmers' fields (and even before rehabilitation the problems may not have been very large). This is not surprising with a design discharge capacity of 25 m 3 /s for a system of 11,000 ha. This means 2.27 l/s.ha with 24 hours/day pumping. If we would take 1 l/s.ha as a water allowance for paddy cultivation at main canal level, this would imply 10.6 hours/day of pumping. In addition to this there would be rainfall. The water supply situation thus is comfortable provided there is water in the canal from which the water is pumped. Supply problems occur mainly for within-system maintenance and management reasons.

In our observation the sub-WUAs do not effectively exist as farmer organisations. Even the secondary canal level WUAs effectively exist only as groups of office bearers. Evidence from two secondary canals that were studied in detail supports this.

In No.7 and 9 secondary canals there are three WUAs. Basic information on the three WUAs is shown in table 7.

Due to the fact that most chairmen of WUAs are directors of WMSs, the separation of functions and responsibilities between WUAs and WMSs is not always totally clear. In each WUA, the accountant is a deputed employee of the WSC. Only the accountant can manage the water fee (cash).

The present form of organisation is evolving further, partly in relation to the reorganisation of villages that is taking place. There is a general policy to reduce the number of villages by amalgamating existing villages. When the number of villages is reduced, and the village committees combined, farmers will pay less towards salaries of office bearers than before. For example, in No. 7 secondary canal, seven villages have been combined into four.

Table 7: Information on three WUAs in Zaohe ID

a) There are no women in the boards of the WUAs

b) WMS = Water Management Station in township

c) In each WUA, there is one accountant who is a staff of the Water Supply Company and gets salary from the WSC

The president of the Dayu Group gave us the following account of how he plans to relate village combination with WUA reconstitution. He has the idea to change the WSC into a general WUA and to re-establish the existing (sub-) WUAs and base them on village units, to make water fee collection simpler. A vice-director charged with agriculture in Suyu County would be invited to be the honorary Chairman of this general WUA. Under the general WUA, some WUAs will be reconstituted based on both the boundaries of tertiary canals and village boundaries. Last year he reported this idea to the County government, and it has been agreed by the local government to start this new reform following the village combination. New WUAs will be set up based on the new village boundaries, and the party secretary or village leader will take the role of chairman in WUAs. In 2001 half of the 18 WUAs at secondary level are going to change to 26 WUAs at village/tertiary level.

What this means is that the existing WUAs at secondary level, which hardly have farmer representation, will disappear, and that the principle of hydraulic boundaries will be largely abandoned, and a return will take place to villages as units. There will be a direct relation between a system-level organisation (the ID/WSC recast as a general WUA), and village level organisations called WUAs. The procedure of water fee collection in the 1998-2001 situation was water user ? village ? WUA ? WSC. After the reconstitution of WUAs, it will be changed to water user ? WUA ? General WUA.

The findings reported above raise a number of questions about election and representation in WUAs. We were fortunate to be able to attend on 18 August 2001 the meeting for the election of the WUA board of the new village of Tangwei.

Tangwei village has about 800 households with a total population of 3700. 55 farmers' representatives attended the election meeting. There were many young farmers among them. and two female farmers. The board group of the WUA consists of 5 persons: one chairman and 4 team leaders. Their names were on the ballot paper as the candidates who had been determined by the County government, Zaohe ID and the Village Committee before the election meeting. It was proposed to appoint the leader and party secretary of Tangwei village as the chairman.

On the ballot paper, two blank cells followed these five candidates' names. The voter has to vote for five persons by putting a circle before the candidate's name. With a cross the voter can indicate that he/she does not want to vote for this candidate, and another name can be put in the blank cells. This effectively means one has to vote against someone when one would like to propose another candidate.

The result of the voting was that each proposed candidate got 55 votes. The five candidates were asked to go outside of the room to elect a chairman and they returned back after a few minutes, having decided that the village leader, who is also the party secretary, is the chairman of WUA. The chairman was asked to speak.

There is no doubt that calculation and collection of water fees has become more transparent. The water price per cubic meter is gradually raised to reach the level of cost recovery for O&M. At the moment farmers are also paying for the (World Bank) loan that funded the system rehabilitation. Water fees per unit area seem to be going down. Unit cost per volume is increasing, but according to official statistics use of water per unit area is reducing, while area irrigated is expanding. Overall total collection of water fees remains stable. This is partly a product of the calculation method. For part of the water fee, actual O&M costs are divided by total water consumed, giving a unit price per cubic meter. Simplification of the water fee collection seems to be an important driver of the reform process. This is also evident in the future development of the institutional structure as envisaged by the system manager.

No systematic information on the environmental impact of the system modernisation was found. Many trees have been planted along the newly lined canals. Reportedly, formerly waterlogged areas have been improved by growing fruit trees, medicinal herbs, flowers and grass, also increasing the beauty of the landscape. It may be speculated that the canal lining has led to lower seepage losses. Better field irrigation methods may have led to more efficient application of fertilisers and pesticides, and surface and ground water pollution through these agents may have reduced. However, a database on the environmental dimensions of the irrigation (reform) was not available.

The following are the main conclusions regarding irrigation modernisation in Zaohe ID.

The infrastructure and condition of the irrigation system have been improved, which has increased irrigation efficiency. In general and average terms, there seems to be no water scarcity issue in the system. The study does not provide convincing evidence that there has been any effect of the reform and system rehabilitation programme on agricultural productivity at farm level. The farmers interviewed show the crop yield has remained the same before and after IMT. The economics of system rehabilitation therefore remain somewhat questionable. The economic gains are located in 1) expansion of irrigated area leading to increased total agricultural output (but the area figures would need further study given the discrepancies found), and 2) in the reduction of management cost (but cost recovery as presently evolving includes O&M costs and only partly the larger capital investments through loan repayment; for the individual farmers there seems to be a limited reduction in irrigation costs).

The mode of water fee collection has been improved. Staff of WSC collects water fees from villages or farmers, who receive a WSC invoice before payment and a receipt after payment. It makes clear to farmers how much they have paid as water fee. More transparency in water fee payment and collection has been achieved. Nevertheless fee payment in practice is still by area at the village committee office, and therefore the change with the past is more apparent than real for many farmers.

The loan agreement with the World Bank stipulates that all projects supported from it have to include a component of institutional reform. The World Bank recommends the SIDD model. It has not been designed by water users or the staff of the irrigation agency, and does not seem to have their full support. The process of institutional reform in the Zaohe irrigation system is still ongoing. From the establishment of a company for system management, the direction of change seems now to be towards an umbrella WUA for the whole system, with WUAs based on the recently combined larger villages.

What this seems to amount to finally is a separation of the water fee from other fees, and a more direct payment system with fewer levels. The concept of the WSC seems to be on the verge of being abandoned, but the principle of cost recovery is firmly established. The system is still centrally controlled.

At a more general level, the Zaohe case raises the question how the irrigation reform process should be interpreted.

Since 1980 the role of the state in P.R. China in economic life has become more regulatory. One of the effects of the combination of decentralisation and a smaller direct role of the state in economic activity is that state investment in agricultural infrastructure (capital investment) has gone down dramatically since the 1980s. However, private investment in irrigation infrastructure improvement or creation is not a particularly likely option, as the profitability of that investment would be low as compared to other, booming sectors. Farmers themselves hardly invest their surpluses in their farms. Given the agrarian scenario (very small holdings, a lot of part-time farming, strong subsistence/food security element in many regions, downward pressure on food prices) returns on investment in irrigation will be low. This implies, in our view, that the concept of a water supply company, as a commercial enterprise, may not be a very promising one, unless other sources of income than irrigation management exist. A not-for-profit service provider would be a more fitting description of what is required. This seems to be born out by the Zaohe case.

The state will have to play an important role in the modernisation of the irrigation systems, particularly because many of these have technical problems given the way they were designed and constructed in the 1960s and 1970s. It may be difficult to raise sufficient resources from farmers for these main system investments. One way the reforms in Zaohe can be read is that the World Bank loans served to mobilise investment funds at main system level to compensate central government funds that had been lost in the overall socio-economic reforms⁴. To acquire these funds, the institutional reform had to be shaped following World Bank emphases (WUAs and WSCs), but when the investment has been done the institutional transformation process resumes its earlier course.

Another reading is that the reform is primarily a (financial) management re-structuring. This implies separating water fees from other payments that farmers have to make, and making the system of assessment and collection of the water fees more transparent. Basically, in the present reform process, the aim seems to be to concentrate system management in the hands of those who have a functional interest in it (farmers and the water agencies), and avoid too much involvement of those who haven't (notably village, township and county governments), and organise the financial management accordingly.

4Different levels of the Chinese government have invested in the modernisation of Zaohe infrastructure in combination with the World Bank loan. Whether the loans attract scarce government funding to particular places or whether overall government investment in infrastructure is again on the increase, we are unable to tell.

In summary, there are several possible answers to the question how the Chinese irrigation reform experience should be understood.

1. As an element of state-led agricultural modernisation with as key focus the technical upgrading of the canal systems and achievement of financial sustainability for operation and regular maintenance.
2. As an effort to introduce market mechanisms in water resources management in order to enhance efficiency.
3. As a democratisation exercise that will give farmers/water users greater control over the governance and management of their systems.
4. As an exercise of institutional simplification, to produce more straightforward management structures.
5. As a realignment process within the bureaucracy in which the line department gains control and the civil administration loses control.

We recommend that further research would focus on a larger cross-section of reform experiences to assess the nature of the institutional reform and the role of physical rehabilitation of the systems within this.

5. REFERENCES

Official Document on “Establishment on Water Supply Company of Dayu Group, Zaohe ID”, Suyu County Government, 1998.

Zaohe Irrigation District, The working report on SIDD Project Implementation in Zaohe ID, 2000.

Zaohe Irrigation District, Working Report on irrigation reform in Zaohe Irrigation District, Suyu County.

Zaohe Irrigation District Report, “Increasing Water Using Efficiency in the National Continued Construction in Water Infrastructure”, 2001.