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About water market

Abdul Bayes | January 09, 2014 00:00:00


In the context of Bangladesh, water is both an asset and a liability. There are, perhaps, very few countries in the world where water appears to be both scarce and abundant within a very short period of time. In the dry season, farmers are in dire need of water for growing crops, and a shortage of that (i.e. scarcity of water) adversely affects agricultural production. For ages, farmers in Bangladesh were deprived of the paddy crop in the dry season due to the paucity of water.  At that time, they used to grow only one paddy crop under rain-fed conditions. But in the monsoon season also, supply of water sometimes appears as a curse rather than a cure, when floods inundate vast tracts of crop fields. About one-thirds of the country's area is generally submerged in monsoon flood in a normal year.

Average rainfall in Bangladesh is more than 2,000 mm per year with more than 75 per cent occurring from June to September. Thus, excessive water-logging in the rainy season and inadequate moisture in the soil in dry season (January to April) adversely affect the production of the main staple crop - paddy.

In terms of the depth of flooding during the peak of the monsoon season, the cultivated land in Bangladesh could be categorised into four types:  (a) high land is not flooded at all; (b) medium land is flooded up to 30 cm depth; (c) low land faces flood between 30 to 90 cm and (d) very low land lies under a depth of more than 90 cm of water. This information was colleted from farmers for each of the plots owned by them and was used to get a distribution of land at the village level by depth of flooding. In a large number of villages, substantial variation in topography of the plot exists, and quite a few villages have both high and very low land side by side. The implication of this finding is that, even if topography tells upon the adoption of MVs (modern varieties), at least some land is found suitable for cultivation of MVs. Again, where the farmer operates a number of plots at different points and at different elevations within the same village, there is a good chance that at least one of his plots could be suitable for growing MVs. This makes the distinction as per adopters and non-adopters difficult. By and large, an unfavourable production environment for MVs is said to exist either in high land (inadequate soil moisture) and very low land (excessive water logging). According to a survey undertaken in 62 villages, about 45 per cent of the land area in the study villages is found to be unfavourable.

For all seasons, the rate of adoption of MVs is the highest on medium high land, followed by high land and very low land. During the dry season, adoption is the highest on very low land and medium high land, but lowest on high lands. The reasons are not far to seek. During the dry season, extremely low-lying villages have relatively easy access to surface water from rivers and canals, while medium high villages have access to ground water. This makes the incidence of irrigation quite high. Adoption of MVs during wet season, however, varies with the elevation of land.

Water appears as woes on another count. Bangladesh has a long coastal area that suffers from saltwater intrusion, particularly in the dry season, when salt is deposited in the soil in some areas. MVs available in Bangladesh are not sufficiently tolerant of salinity and, hence, the coastal areas are deprived of the opportunities of growing these crops.

From the very inception of mechanised irrigation in the country, the Bangladesh Agricultural Development Corporation (BADC), a state parastatal, stepped in for supplying seed and water to farmers. BADC used to buy deep tube wells (DTWs) - with a capacity of watering 12-15 hectares of land - and rent these out to village cooperatives. Besides, low lift pumps (LLPs) were also rented out for irrigation by using surface water. At that time, private sector intervention in minor irrigation was banned.

In subsequent periods, BADC decided to sell DTWS and LLPs to farmers. Quite expectedly, these lumpy equipments were bought mostly by big landowners because: (a) they could afford to offer substantial amount of cash as down payments to procure equipments and (b) they had relatively more access to formal institutions for finance. However, the owners of DTWs and LLPs started to sell water to the villagers. Very soon it appeared that, in the face of high demand for water, owners of the equipment began to charge excessive rates for water and, within a few years, they emerged as "water-lords".  On the other hand, possibly to help these groups, installation of shallow tube wells (STWs) within a fixed radius was banned by the government. Thus, water soon turned out to be woes in the wake of the monopsonistic behaviour of the state-sponsored water-lords.

Since the mid-1980s, the government implemented an epoch-making policy reforms in the marketing of agricultural inputs. The policy aimed at reducing the role of the government and, at the same time, lubricating the role of the private sector in the arena of irrigation. And to this effect, the government (a) removed the ban on private-sector investment for minor irrigation equipment; (b) encouraged the private sector to import agricultural machinery; (c) reduced import duties on pumps and other accessories and (d) lifted the restrictions on standardisation of irrigation equipment. Ipso facto, Bangladesh experienced a rapid expansion of irrigation facilities after those policy changes. In the period following liberalisation of equipment markets, considerable investment has been made in developing groundwater irrigation.

As a result, a market developed in rural areas, especially in dry season, to exchange water for MV paddy (boro). We have named it as "water market". As of now, 1.2 million shallow machines are operating and all of them are under private ownership. Under different contractual arrangements, the services of the wells are sold in the "water market".

At the same time, and as revealed by different researches, a revolutionary change has also taken place in the mode of payments of water price. Initially, one-fourths of the harvested crop was to be surrendered in exchange for water, as and when needed. Later, a system of cash rental, per hectare per season, was introduced. And recently, a system of water charge per hour of the machine has been developed in many places. The hourly rent varies depending on who bears the cost of the fuel. With the development of the hourly rate, water is apparently being used more efficiently and the unit cost of irrigation has begun to decline.

Abdul Bayes is a Professor                    of Economics at                        Jahangirnagar University.                  [email protected]


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