Irrigation

It is difficult to over-estimate the role played by agriculture in low- and middle-income countries, where it remains the main generator of economic activity and employment in rural areas. Irrigation is the single most important factor in increasing agricultural intensification and productivity—it can dramatically increase food availability, income, investments in rural infrastructure, and can lead to unprecedented growth in rural economies. There has been very little investment in developing countries in irrigation infrastructure, however, as it is costly to build and expensive to maintain.

Traditionally, irrigation systems have been built using large, top-down public funding programs that involve little or no participation by individual farmers. Many of these schemes have resulted in overly ambitious infrastructure services that were not supported by farmers and produced unplanned, long-term fiscal burdens on national governments with scarce budgetary resources.

PPIAF has supported a number of public-private partnership (PPP) activities in the irrigation sector and has built a critical mass of knowledge on ways to effectively involve the private sector in financing and managing such facilities—in particular using new approaches to project development, transaction design, and public-private arrangements. PPIAF has identified farmer consultations as a critical step to structuring sustainable irrigation PPPs. It is also essential to make use of the latest analytical techniques to minimize tariffs, mitigate risks, and estimate the size and nature of results-based subsidies in cases where farmers are unable to pay the full costs of services.

Below are some examples of irrigation activities PPIAF has supported. Final reports or other related publications are included when available.

  • In 2004 the government of Egypt requested PPIAF assistance to develop a conceptual framework and transaction model for implementing a surface water irrigation system in the West Delta region. A demand-driven approach, involving consultations with farmers to ensure their needs and willingness to use and pay for services, was used to guide the development of the technical design, financing alternatives, and tariff structure. A PPIAF publication summarizing the demand-driven design for this irrigation scheme is available here.
     
  • A follow-up activity in 2005 assessed options for managing foreign exchange risk, and developed economic, regulatory, and institutional frameworks to guide the government in improving its relationship with the irrigation users. The recommendations of the PPIAF reports were adopted by the government in late 2006. The Impact Story summarizing PPIAF’s assistance to the project can be found here.
    Click here to see the report titled: Conceptual Framework and Transaction Model for a PPP in Irrigation in the West Delta, Egypt.
     
  • In 2006 the government of Egypt requested funding to identify a private sector engagement blueprint for the operation and maintenance of water resources such as irrigation and drainage to improve the energy efficiency and service delivery of irrigated water. As a result of the PPIAF-funded analysis and a series of seminars, an action plan to introduce PPPs and private sector participation in operation and/or maintenance of irrigation and drainage infrastructure was drafted but is yet to be formally adopted by the government. As a result, plans to pilot private sector participation in 15 pumping stations across Egypt and a follow-up World Bank project have been delayed.
     
  • In 2005 the government of Brazil requested PPIAF funding to develop a comprehensive framework for the implementation of public-private partnerships (PPP) for the irrigation sector. The activity produced a study with clear and actionable recommendations which will contribute to emerging lessons and experience in irrigation PPPs and will be relevant to a much wider range of institutions and government agencies. Clickhere to see the report titled Brazil: Framework Analysis for Public–Private Partnerships in Irrigation. The report is also available in Portuguese.
     
  • In 2006 the government of Ethiopia requested PPIAF funding to prepare an action plan to develop irrigation PPPs in three locations: Megech, Ribb River, and Anger Valley. The PPIAF activity helped the government develop and enhance an understanding of PPP structures and how they can be used in the irrigation sector. The range of PPP models presented in the study allowed the government to analyze options and select the most appropriate PPP transaction structure, a modified management contract. (Final Report on Ethiopian Nile Irrigation and Drainage Project: PPP Options and Action Plan, Click here to see the report). Following PPIAF assistance, consensus was achieved on the benefits of the management contract PPP structure to improve and expand irrigation services in Ethiopia. An innovative approach to the contract was undertaken in order to adapt the level of risk transfer to the capacity of the market. This included charging farmers an irrigation service fee for the full cost of operation and maintenance of the irrigation system—including energy costs—thereby contributing to making the system financially sustainable. As a result, additional support was requested in 2010 from PPIAF to fine-tune the PPP arrangements, including transaction support for the Megech (Lake Tana) irrigation project. In April 2012 the government of Ethiopia signed a contract to engage French operator BRL Ingénierie to provide operation and maintenance services for the Megech-Seraba irrigation project. The eight-year management contract, which began in 2012, reflects the key recommendations of the PPIAF-funded options study. The project is the first PPP transaction established for the construction and management of a new, large-scale irrigation scheme for the benefit of smallholder subsistence farmers. Click here to see the related impact story.
     
  • In 2008 PPIAF, in partnership with the World Bank Institute, provided funding to develop an online training course for PPPs in irrigation with three modules: 1) Irrigation and PPPs, an overview of problems commonly experienced in government-provided irrigation and an examination of PPPs as an alternative model to solve; 2) Initial Design Tasks for PPP Transactions, an overview of the process for developing a PPP transaction and examines several initial design tasks; and 3) Detailed PPP Design, which examines more detailed design tasks of allocating functions and risks and designing regulatory and monitoring arrangements. The course is offered through the World Bank Institute website. Click here to learn more about the course.
     
  • In 2009 the government of Malawi requested PPIAF assistance to conceive viable PPP models for financially sustainable irrigation development and to prepare a specific options analysis for starting a PPP process for the proposed Shire Valley Irrigation Project. The main objective of the activity was to conduct awareness raising and capacity strengthening activities among key line Ministries, private investors, and water users (small- and medium-scale farmers) about different options and modalities, and to identify potentially promising and economically viable PPP options for the proposed Shire Valley Irrigation Project. A study on PPP options and awareness raising for irrigation investment was produced. The report is available here.

 

Related PPIAF Materials

 
PPIAF Supports Private Sector Participation in Egypt’s West Delta Irrigation Project

Conceptual Framework and Transaction Model for a PPP in Irrigation in the West Delta, Egypt

A Demand-Driven Design for Irrigation in Egypt: Minimizing Risks for Both Farmers and Private Investors

Brazil: Framework Analysis for Public–Private Partnerships in Irrigation  (Portuguese)

Ethiopian Nile Irrigation and Drainage Project: PPP Options and Action Plan

PPIAF Support to Private Sector Participation in the Irrigation Sector in Ethiopia

Online course on PPPs—Improving Performance of Irrigation Services Provision

Public-Private Partnership options and awareness raising for irrigation in Malawi


Slideshow PPIAF in Action: PPPs in Irrigation

This slide show examines PPIAF's support for irrigation PPPs in Africa. PPIAF promotes dialogue between farmers, local and national governments, and the private sector on the impacts of irrigation PPPs.


 

Other useful related materials
Emerging PPPs in Irrigation Development and Management