Economic issues regarding tertiary canal improvement programs, with an example from Egypt

Public investments in farmer-managed tertiary canals can promote an improved distribution of water among farmers, enabling them to improve water management practices, enhance crop yields, and select from a wider variety of cropping choices. This paper examines economic issues regarding public programs designed to improve or rehabilitate tertiary canals, particularly in developing countries. Key issues include defining property rights to irrigation water or delivery capacity, and to new or improved irrigation facilities; communicating the relative scarcity of agricultural inputs with appropriate prices or allocations; implementing cost recovery; and determining the best mix of public and private sector participation. The transaction costs of implementing market-oriented programs are also discussed. Economic issues are illustrated by describing Egypt's national Irrigation Improvement Project, for which a set of alternative cost recovery programs is presented.