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Module 9 - Investments in Agricultural Water

Irrigation and drainage systems have traditionally been the largest subsector for World Bank agricultural lending, and they remain important to improving agricultural productivity and reducing poverty in many countries. However, the context has changed, and irrigation and drainage systems are now seen as part of a broader range of investments that improve the availability of soil moisture for plant growth. “Agricultural water management” broadly defined in this way is just one input to a complex set of determinants of agricultural profitability and household livelihood decisions, which in turn have complex interactions with other rural social and policy issues. Decision makers must consider these broader issues in the design and implementation of agricultural water projects.

Rationale for Investment

Agricultural water development is essential to meeting the world’s food and fiber needs

The World Bank’s rural strategy, Reaching the Rural Poor, recognizes that water is an essential input into agricultural production, as well as the basis for livelihoods of rural communities and a major influence on the quality of other natural resources. Efficient agricultural production for local and export markets will become increasingly important for economic growth and poverty reduction. Over the past 30 years, the world’s net irrigated area has increased by almost 60 percent, from less than 170 million hectares in 1970 to over 270 million hectares in 2000 (FAOSTAT 2002). In developing countries overall, agriculture accounts for more than 85 percent of water utilization (IWMI 2001). Globally, irrigated agriculture represents only 17 percent of total land cropped but provides 40 percent of the world’s food.

The strong demographic push to food demand is expected to continue, and it is anticipated that irrigated agriculture will provide close to two-thirds of the additional food needed over the next 25 years. In addition to relying on intensified irrigation systems and better use of water in rainfed agriculture, there is still some potential to expand irrigated area, which could increase by up to 20 percent (40 million hectares) over the next 25 years. The resulting risks for the environment and for society will require careful management, however. Growing water scarcity will have to be managed as well, with a strong need to further improve water productivity and strengthen the use of demand management approaches. In many river basins, intersectoral competition for water resources is a critical challenge that will need to be addressed.

Most gains will come from areas where agricultural water is already managed

The expansion of irrigated area slowed from two percent a year in the 1960s and 1970s to hardly one percent in the 1990s, and water is increasingly unavailable for irrigation. Given present land and water resource constraints and the shortage of potential areas for new development, most production gains must come from better utilization of existing irrigated areas. This challenge is great, as physical deterioration, outdated infrastructure, or inadequate institutional arrangements have caused current systems to perform below expectations. While there has been some institutional reform, national and local irrigation organizations need modernizing and improved management.


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