Over the last 50 years, the irrigation and drainage sector has played a vital role in food production, rural economies and in meeting the world’s fast-rising demand for food. But with population growth and water becoming an increasingly scarce resource, irrigated agriculture will need to continue to rapidly expand and become more productive and efficient to produce ‘more crop per drop’. Yet irrigation and drainage systems have seen a decline in investment since the 1980s and schemes are often challenged by inefficient water management, lack of cost recovery and lack of incentives for water saving, all of which place a huge financial burden on government. The scope and scale of irrigation projects can vary widely and involve a range of actors, from constructing key infrastructure, such as main primary canals and secondary canals to on-farm agricultural developed, involving large-scale commercial farmers on one hand to small-scale subsistence farmers on the other.
The private sector has often driven innovation through on-farm water efficiency and in commercial agriculture and yet this has not translated into a large-scale adoption of private sector participation in traditional irrigation schemes, which largely remain publicly funded and managed despite the huge financial burden that this places on governments.
While PPPs in the irrigation sector have been established in Europe for many years, experience from emerging economies has shown a small but growing number of cases of PPP in the irrigation sector. Introducing private sector knowledge, technology and incentive structures can help to improve water use efficiency and ensure more sustainable water management. There are various ways in which PPP arrangements have been used in irrigation, ranging from simple management contracts, where the private party takes over operation and maintenance responsibilities in return for a performance-based payment, to concession contract where the private firm is responsible for constructing, managing and to some extent, financing the irrigation infrastructure assets over a long period of time. PPP projects, for example in Ethiopia, Morocco and Zambia, have taken very different approaches to the PPP structure to adapt to local conditions and the specific needs of the project.
In irrigation projects in particular, the scope of the PPP can also vary greatly, from the development and operation of the main water source and conveyance to including the on-farm agricultural development. It also should be recognized that irrigation schemes are part of the broader agricultural value chain where the private sector can have a role. This brings its own issues and challenges to consider when assessing the viability of the project as a PPP and presents a unique set of risks such as, land tenure, type of agricultural practices and crops being produced by the farmers, agricultural commodities price volatility and the role of farmer organizations or Water User Associations (WUAs) that need to be taken into account.