Economic and land use impacts of improving water use efficiency in South Asia

This paper uses an advanced computable general equilibrium model coupled with biophysical data on land and water resources by Agro-ecological zone at a river basin level to examine: 1) the economy-wide consequences of improvement in water use efficiency (WUE) in irrigation in South Asia; 2) the extent to which enhanced WUE can increase food production and improve food security in South Asia; and 3) how WUE in irrigation alters demand for water and affects land use across South Asia. Given that the extent to which the economies of South Asia can actually improve water use efficiency in irrigation is uncertain, it tests four different levels of efficiency gains in irrigation: 10%, 20%, 30%, and 40%. It examines improvement in WUE under two alternative cost assumptions: 1) improvement in WUE is costless and 2) improvement in WUE needs additional investment. With a 10 percent improvement in WUE, the overall respective increases in food production during the time period 2008-2030 in India, Bangladesh and the rest of South Asia would be about $50.5 billion, $3.5 billion and $29.6 billion at 2007 constant prices. Improvement in WUE in irrigation reduces the rain-fed harvested areas and increases irrigated areas. A 10 percent improvement in WUE increases the areas of irrigated cropland by 6.1 million hectares, 296,000 hectares and 1.9 million hectares in India, Bangladesh and the rest of South Asia. When improvement in WUE is costless, the net present values of gains due to a 10 percent improvement in WUE (with a 3 percent social discount rate) are about $45.6 billion for India, $3.6 billion for Bangladesh, and $21.8 billion for rest of South Asia at 2007 constant prices for the time period of 2007-2030. Gains grow as the level of improvement in WUE increases. When improvement in WUE needs additional investments, welfare gains drop but gains in food production remain high.