An economic perspective on the potential gains from improvements in irrigation water management

In recent years, several researchers have introduced new terms describing irrigation efficiency to enhance the information available when evaluating water policy alternatives. Some of the definitions expand the physical boundary considered when evaluating water use, while others account for the changes in water quality that occur as drainage water is reused in an irrigated area. While the concepts of basin, global, and effective efficiency have enhanced our understanding of water use in agriculture, public officials may derive incorrect policy implications when reviewing empirical estimates of those measures, particularly if information describing the economic impacts of water use and allocation decisions is not available. For example, some authors suggest that when estimates of basin-wide efficiency approach 100%, there is little opportunity to save water by improving water management and achieving higher levels of classical, farm-level efficiencies in upstream portions of an irrigated region. However, there may be significant opportunities to increase the net values generated with limited water resources by improving the distribution of water among farmers and reducing the negative, off-farm effects of irrigation and drainage activities. Economic analysis is helpful in identifying those opportunities and in designing policies that encourage farmers and water agency personnel to improve water management practices in ways that enhance social net benefits.