The Visayas Communal Irrigation Project

This paper deals with the feasibility of a communal irrigation project in the Philippines where the farmer beneficiaries pay for the infrastructure cost and are responsible for the operating and maintenance cost of the irrigation system. A financial analysis from the investment, equity, and budget points of view and an economic evaluation are conducted on the incremental benefits of the project. Sensitivity and risk analyses are made to determine the variables that have high impact on the project's net present value. The analyses show that the project is very sensitive to the incremental palay production. The NPV from the investment point of view has a 15% chance of being negative. These points to the importance of the project components that address the constraints to higher farm productivity such as limited technology transfer, unavailability of high yielding variety seeds, lack of applied research, poor water management, inadequate farmer training and large post-harvest losses. The NPV from the equity and economic points of view are very robust and they do not have a chance of being negative. The former is due to the subsidy given to the farmer beneficiaries while the latter is the result of the high economic value of palay. Aside from the farmers the other major beneficiary of the project is the landowners who lease their farms because they get 25% of the gross value of production as lease payment.