THE GSI’S METHOD FOR QUANTIFYING IRRIGATION SUBSIDIES

The Global Subsidies Initiative (GSI) presents a methodology for measuring irrigation subsidies by calculating the difference between the cost of making irrigation water available and the revenue received from beneficiaries. The framework focuses on 'full supply cost,' incorporating annual capital costs (interest and depreciation) and operation and maintenance (O&M) costs, while excluding complex elements like opportunity costs and full social costs due to data constraints. It provides detailed guidance on allocating joint capital costs in multi-purpose projects using the Alternative Justifiable Expenditures (AJE) and Separate Costs, Remaining Benefits (SCRB) methods. The methodology also addresses specific subsidies such as discounted electricity for groundwater pumping and identifiable government expenditures on environmental externalities. Revenue components include water sales, hydropower, fishing rights, and pollution taxes.

• The GSI adopts the 'Net Cost to the Supplier Approach' as the preferred methodology because of its transparency and applicability across diverse countries, defining a subsidy as the difference between the cost of making irrigation water available and the revenue received from beneficiaries.
• The framework focuses on 'full supply cost,' which consists of capital charges (depreciation and interest) and operation and maintenance (O&M) costs, while explicitly excluding 'full economic cost' and 'full (social) cost' due to resource and data limitations.
• To determine the annual cost of capital, the methodology recommends using a current value based on an inflation index and suggests a conservative average service life of 50 years for medium-to-large irrigation projects to calculate a 2% annual straight-line depreciation.
• For multi-purpose projects, the document outlines two methods for allocating joint capital costs: the Alternative Justifiable Expenditures (AJE) method, which is easier to calculate, and the Separate Costs, Remaining Benefits (SCRB) approach, which is recommended for planning contexts.
• Subsidies for groundwater-based systems are primarily measured through the cost of supplying discounted electricity, calculated as the gap between the market or commercial rate and the preferential rate charged to farmers.
• Environmental externalities are incorporated into the methodology only as identifiable economic costs of prevention or mitigation funded by government expenditure, such as restoring saline water or treating wastewater.
• Government revenue from irrigation is composed of water sales, hydropower generation, the auctioning of fishing rights, electricity sales for pumping, and pollution taxes.
• The methodology identifies significant barriers to empirical estimation, including the non-availability or denial of access to disaggregated data by government agencies for political or trade-related reasons.

APA

International Institute for Sustainable Development (2009). THE GSI’S METHOD FOR QUANTIFYING IRRIGATION SUBSIDIES. https://www.iisd.org/system/files/publications/irrigation_methodology_complete.pdf

Chicago

International Institute for Sustainable Development. THE GSI’S METHOD FOR QUANTIFYING IRRIGATION SUBSIDIES. 2009. https://www.iisd.org/system/files/publications/irrigation_methodology_complete.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=THE GSI’S METHOD FOR QUANTIFYING IRRIGATION SUBSIDIES |date=January 2009 |url=https://www.iisd.org/system/files/publications/irrigation_methodology_complete.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2009gsis, author = {{International Institute for Sustainable Development}}, title = {{THE GSI’S METHOD FOR QUANTIFYING IRRIGATION SUBSIDIES}}, institution = {International Institute for Sustainable Development}, year = {2009}, month = jan, url = {https://www.iisd.org/system/files/publications/irrigation_methodology_complete.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }