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Valuation and Pricing of Surface Water Supplies in Pakistan

Mohammad Asif Khan
The Pakistan Development Review
Vol. 46, No. 4, Papers and Proceedings PARTS I and II Twenty-third Annual General Meeting and Conference of the Pakistan Society of Development Economists Islamabad, March 12-14, 2008 (Winter 2007), pp. 939-955
Stable URL: http://www.jstor.org/stable/41261205
Page Count: 17
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Valuation and Pricing of Surface Water Supplies in Pakistan
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Abstract

Out of the total annual flow of 151.58 MAF water, 103.81 MAF is being diverted to irrigate 45 million acres of farm land in the country. Only 55 percent of diverted flows become available at farm gate, 42 percent infiltrate to groundwater, and 3 percent are lost as evaporation. Per acre availability of water is decreasing day by day owing to urban/industrial demand, global warming, environmental change, and increased area demand. Groundwater owing its existence to operational canal system supplies over 40 percent of crop water requirements. The value of water on the basis of incremental applications can not be determined as the measurement of crop yield is a function of incremental water applied in an uncontrolled and unpredictable environment. Water rate is a small proportion of crop production cost. Increasing its rate would, therefore, not lead to its economical use; rather will add to the financial burden of small farmers, who normally have higher cropping intensity. The rates are, however, much less when seen in the historical context or in the light of prevailing O&M costs and cost of water saving by remodelling/rehabilitation of irrigation channels or groundwater extraction. Present water rates meet only 45 percent of system O&M needs in Punjab, and much less in other provinces. For proper upkeep of the system, there is a dire need to increase it to the level of at least O&M cost recovery.

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