TOWARDS A COMMON METHODOLOGY FOR MEASURING IRRIGATION SUBSIDIES

The paper argues that current irrigation subsidy estimates are inconsistent and lack transparency because they often ignore capital costs, opportunity costs, and environmental externalities. It proposes two primary measurement approaches: a 'net cost to government' method, which subtracts total revenues (including hydropower and fisheries) from gross costs (including depreciation and externalities), and a 'net benefit to recipient' method, which compares the water's economic value to the price paid. The author highlights that irrigation is a major global water consumer, often heavily subsidized, which discourages efficient water use and leads to environmental degradation such as salinization and groundwater depletion.

• Irrigation is the dominant water use globally, accounting for 70 to 90 percent of total water use in developing countries and over one third in many OECD countries.
• Existing estimates of irrigation subsidies are generally not comparable because they use inconsistent methodologies, often equating cost only with current operation and maintenance (O&M) costs and ignoring opportunity costs or externalities.
• The 'net cost to government' approach defines the subsidy as the difference between gross costs—including annual capital costs, O&M, groundwater provision, opportunity costs of water and electricity, resource costs, and environmental externalities—and total revenues.
• Government revenues from irrigation extend beyond water tariffs to include sales of hydropower, fishing rights, electricity for pumping, tourism, and pollution taxes.
• The 'net benefit to recipient' approach measures the subsidy as the difference between the water's net economic benefit (such as the marginal value product) and the price paid by the user.
• Irrigation subsidies often lead to severe environmental externalities, including soil salinization affecting 10 to 48 percent of the world's total irrigated area and significant groundwater depletion in India, China, and the US.
• In India, irrigation subsidies on major, medium, and minor projects grew from approximately Rs 2,700 million in 198081 to over Rs 43,000 million in 19992000.
• Australia has implemented reforms through the National Water Initiative (NWI) to achieve full cost recovery for rural surface- and groundwater-based systems using lower-bound and upper-bound pricing.

APA

International Institute for Sustainable Development (2008). TOWARDS A COMMON METHODOLOGY FOR MEASURING IRRIGATION SUBSIDIES. https://www.iisd.org/system/files/publications/irrigation_methodology.pdf

Chicago

International Institute for Sustainable Development. TOWARDS A COMMON METHODOLOGY FOR MEASURING IRRIGATION SUBSIDIES. 2008. https://www.iisd.org/system/files/publications/irrigation_methodology.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=TOWARDS A COMMON METHODOLOGY FOR MEASURING IRRIGATION SUBSIDIES |date=June 2008 |url=https://www.iisd.org/system/files/publications/irrigation_methodology.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2008towards, author = {{International Institute for Sustainable Development}}, title = {{TOWARDS A COMMON METHODOLOGY FOR MEASURING IRRIGATION SUBSIDIES}}, institution = {International Institute for Sustainable Development}, year = {2008}, month = jun, url = {https://www.iisd.org/system/files/publications/irrigation_methodology.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }