Comparative analysis of the impacts of decentralization

of property rights in a common pool resource 1

Dr. Eduardo Araral

National University of Singapore

Email: sppaej@nus.edu.sg

Abstract

I employ meta-analysis to compare the impacts of decentralization of property rights in a

common pool resource using irrigation as an empirical case. The focus on property rights is the

appropriate starting point for cross country comparative analysis because it provides the building

blocks that shape the incentives, behaviors and outcomes of actors in such a setting. I find that -

as expected - impacts on costs, poverty, productivity and sustainability vary among countries.

Using Vining and Weimer’s framework for comparative policy analysis, I attribute this variation

in impacts to variations in the completeness, clarity, security, durability and autonomy of the

decentralized property rights. I find the framework useful for advancing comparative theory

development in environment and natural resource policy.

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Paper to be presented at the Korea Development Institute – APPAM International Conference on Environmental Policy, Seoul, South Korea, June 11-13, 2009.

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Comparative analysis of the impact of decentralization

of property rights in a common pool resource

Dr. Eduardo Araral

National University of Singapore

Email: sppaej@nus.edu.sg

INTRODUCTION

Scholars of comparative policy analysis - including scholars of environment and natural

resource policy - usually do not specify how the impacts of policy instruments are contingent on

institutional features that vary across countries (Vining and Weimer, 1998). This hinders the

effective borrowing of policy instruments across national contexts and limits the accumulation of

research that could inform institutional design. It also hampers theoretical development in

comparative policy and institutional analysis which has not substantially progressed in the last

ten years as there were no new major theoretical insights resulting from comparative policy

analysis. These were the same problems in the 1970s and 80s when the use of comparative policy

analysis fell largely into disuse because of neglect of the policy context (de Leon and Resnick-

Terry, 1998).

Vining and Weimer (1998) have proposed a framework to address this problem (Table 1).

In essence, the framework is based on five characteristics of property rights (completeness of

allocation, cost of alienation, security from trespass, credibility of persistence, and autonomy)

and are assessed at three levels (individual, inter-organizational, and intra-organizational) for

facilitating accumulation of comparative information. However, few scholars have employed the

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framework despite its potential to advance theoretical development in comparative policy

analysis.

Table 1: Vining and Weimer’s Framework for comparative policy analysis

Private property rights Organizational property rights

Completeness of allocation

How specific are the bundles of rights of individuals over the use of things?

How clear are the rights of organizations vis a vis other organizations?

Cost of alienation How easily can individuals transfer rights?

How easily is it for organizations to transfer legally held rights?

Security from Trespass

How costly is it for individuals to enforce legally held rights?

How costly is it for organizations to enforce legally held rights?

Credibility of Persistence

How confident are individuals that currently held rights will not be involuntarily taken away?

How confident are organizational leaders that currently held rights will not be involuntarily taken away?

Autonomy To what extent do individuals maintain rights over their own persons?

To what extent do organizations maintain rights to their own existence?

More generally, the approach of developing theories of how various institutional settings

influence human behavior builds on the work of scholars of public policy and administration as

well scholars of political science and public choice. These scholars include, among others,

Axelrod (1986), Bendor, Taylor and Van Gaalen (1987), Chubb and Moe (1990), E. Ostrom

(1999; 1996), E. Ostrom, Schroeder and Wynne (1993), Knott and Miller (1987), Miller (1992),

Moe (1994), Niskanen (1971), Schlager (1999), Scharpf (1997), Tang (1991) and V. Ostrom and

E. Ostrom (1971).

I apply Vining and Weimer’s framework in evaluating the impacts of decentralization of

property rights to a common pool resource using irrigation as an empirical example. A common

pool resource is characterized by rivalry in consumption and difficulty in exclusion – for

example forests, irrigation, watersheds, grazing land and oceans. The focus on property rights is

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the appropriate starting point for cross country institutional comparison in a common pool

natural resource because it provides the building blocks that shape the incentives, behaviors and

outcomes in such a setting (Ostrom, 1990).

The choice of irrigation as an empirical example is appropriate for several reasons. First,

irrigation is the major consumer of water resources accounting for about 70 percent of all water

consumption worldwide. Second, irrigation has seen extensive decentralization of property rights

in at least 25 developing countries worldwide in the last 30 years. Finally, the impacts of

decentralization of property rights have been extensively documented through single case studies

which make it now possible to do a comparative meta-analysis of its impacts particularly on

poverty, productivity and sustainability of operation and maintenance of the resource.

I use the organization (irrigation association) as my unit of analysis following the strategy

of methodological individualism. This approach differs from other scholars of comparative

policy analysis who use political structures (Radin and Boase, 2000) or policy arenas

(Timmermans, 2001) as unit of analysis.

In the next section, I broadly examine the literature on decentralization and property

rights followed by the meta-analysis of impacts of decentralization of irrigation property rights.

I end with a conclusion and implications for comparative theory development.

DECENTRALIZATION

The literature on decentralization can be broadly classified into three approaches: 1)

descriptive; 2) normative; and 3) positive political economy. Descriptive approaches are often

found in public administration and development administration literature. In this category are

studies that describe decentralization usually along five dimensions: 1) the functional activities

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over which authority is transferred; 2) the type of authority or powers which are transferred with

respect to each functional activity; 3) the level or areas to which such authority is transferred; 4)

the individual or organization to which authority is transferred at each level; and 5) the legal or

administrative means by which authority is transferred. In this type of scholarship, the unit of

analysis is often the government agency or different levels of government.

The pioneering work by Rondinelli (1989) is an example of the descriptive approach. For

instance, he broadly defines decentralization as the transfer of authority and responsibility for

public functions from the central government to intermediate and local governments or quasi-

independent government organizations and/or the private sector. Rondinelli also identified

different forms of administrative decentralization in terms of deconcentration, devolution and

delegation. The World Bank (2008), on the other hand, suggests that decentralization can appear

in various forms – political, administrative, fiscal, and market decentralization – each of which

has different characteristics, implications and conditions for success within countries and even

within sectors.

The second type of research on decentralization can be referred to as the normative

approach. In this type are studies that assert or present evidence on the benefits of

decentralization. Andersson (2003) provides a meta-analysis on this part of the literature which is

commonly but not exclusively found in development and area studies. Depending on how it is

defined, scholars in this category assert that decentralization can facilitate 1) more efficient

delivery of public services (Oakerson 1998; Wunsch and Olowu 1995); (2) self-governance

(Ostrom 1990); (3) increase in equitable outcomes (Maro 1990); (4) more flexible government

policies (Bish and Ostrom 1973); (5) greater local institutional capacity (Rondinelli et al 1989);

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(6) more accountable government (Ribot 1999; Agrawal and Ostrom 2001); and (7) better match

of public services to local needs (Crook and Manor 1998).

I refer to the third type of decentralization literature as the positive political economy

approach because of its focus on how different dimensions of decentralization affect the

incentive structure of players and their consequences. The focus of this literature is on a more

general set of dimensions that are closely tied to a body of theories – for example collective

action theory and non-cooperative game theory - which seek to identify the factors affecting the

incentives that individuals in centralized or decentralized institutional arrangements face.

Decentralization in Natural Resources Management

There appears to be a consensus in the literature that, in general, decentralization of

property rights to resource users has positive effects on resource management. For instance,

Shyamsundar, Araral and Weeraratne (2005) – based on an extensive meta-analysis of the

literature - find that increased local control indeed motivates local interest in long term

investments, creates space for local decision making and can increase accountability and

management performance. They also conclude that decentralization have ambiguous effects on

poverty. On one hand, it provides opportunities for better private incomes, better access to public

goods and better control of resources but can also lead to higher costs. Furthermore, they find

that decentralization leads to a reduction in the fiscal burden on national governments

particularly in the case of irrigation.

Other scholars – for example Ostrom and Agrawal (2001) - point to several key

limitations of most efforts at decentralization of natural resource management: the limited scope

of property rights, the uncertainty of those rights, and the nature of governance arrangements to

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protect those rights. They assert that many decentralization proposals are limited to the

assignment of operational rights for authorized users to withdraw resource units and that

significant operational rights continue to be held by government agencies including collective

and constitutional choice rights. Absent these rights, they argue, there is little incentive for

sustainable management among resource users.

Furthermore, in a general critique of the decentralization panacea, Ostrom (2001)

suggests that fully decentralized systems (i.e. entirely self organized at a local level) can also be

confronted with the following possible limitations: (1) some appropriators will not organize

because, among others, the resource is not salient and/or there is lack of leadership; (2) some self

organized efforts will fail; (3) prevalence of local tyrannies because of the domination by local

elites; (4) the stagnation of communities which cling to systems that have worked relatively well

in the past; (5) inappropriate discrimination based on characteristics that have nothing to do with

legal rights of individuals; (6) limited access to scientific information; (7) conflict among

appropriators particularly among those without access to conflict resolution mechanisms; and (8)

inability to cope with larger scale common pool resources for those without access to larger scale

jurisdiction.

Rationale for decentralization in irrigation

In irrigation, decentralization is referred to as irrigation management transfer (IMT) or

participatory irrigation management (PIM) – both of which refer to the process of turning over

some responsibilities to the farmers served by a system. In this paper, PIM and IMT are used

interchangeably. The rationale for IMT has been summed up by Vermillion (1997) as follows:

First, government bureaucracies lack the incentives and responsiveness to optimize management

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performance and farmers have a direct interest in enhancing and sustaining the quality and cost

efficiency of irrigation management. When farmers are given the authority and incentives to act

collectively, they are more likely to improve irrigation operations because it is in their direct

interest to do so. Second, when IMT occurs in a supportive socio-technical context, improved

quality and cost efficiency of irrigation management will occur. Third, pressures to decentralize

primarily stems from fiscal problems faced by national governments and decentralization of

responsibilities to farmers is one way to cut the recurring costs of irrigation O&M.

Vermillion’s hypothesis on the incentives faced by government bureaucracies is widely

supported in the empirical literature. In the case of Nepal, Lam (1998) unambiguously finds

empirically that farmer managed systems consistently outperform government managed systems.

Lam argues that the basis for high levels of performance includes a high degree of mutual trust,

active participation in the crafting and monitoring of rules, and a high level of rule conformance.

Lam suggests that these productive working relationships are more likely to be associated with

farmer managed irrigation systems. In contrast, government managed systems are organized

upon a dominance dependent relationship between irrigation officials and farmers. Such a

relationship, argues Lam, yields little incentives for either officials or farmers to contribute their

efforts to irrigation operation and maintenance.

PROPERTY RIGHTS

I use the term property rights in a sense used by legal scholars as a bundle of rights – both

de jure or de facto - to a benefit stream (Knight, 1992). Vining and Weimer notes that property

rights tend to be classified in terms of the nominal owners of those rights i.e. in terms of state

property, private property, common property and open access property. They argue that while

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such classifications are helpful for some purposes, they do not do justice to the complex features

of property rights. Instead, they suggest a more functional description of property rights which

isolates those features most relevant for understanding incentives and behavior: clarity of

allocation, cost of alienation, security from trespass, credibility of persistence, and the degree of

autonomy enjoyed by individuals and organizations in the exercise of property rights.

Decentralization of property rights in common pool resources

Decentralization of property rights to local resource users has been a standard policy

prescription by donors to developing countries in reforming the management of their common

pool resources such as forests, watersheds, coastal and marine resources, irrigation and protected

areas. This policy prescription is based on the theories of collective action and transaction cost.

The theory of collective action suggests that communities will act collectively to advance their

interests when given control of decisions and resources. On the other hand, transaction cost

theory suggests that small scale, local common-pool resources are best governed and managed

by users themselves for motivational and informational reasons. The motivational reason

suggests that since these resources are usually salient to the livelihoods of users themselves, they

are more likely than officials of a national government to have strong incentives to manage these

resources efficiently and sustainably. In addition, national officials are frequently embedded in a

perverse set of incentives given their meager levels of salaries, the magnitude of principal-agent

problems, and opportunities they have for rent seeking.

The informational reason has to do with the cost of obtaining information to manage

these resources. Resource users in developing countries are more likely to have lower costs of

obtaining, assessing, and sharing information about the resource and resource users compared to

agents of the national government. For these reasons, decentralization is often seen as an

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effective solution to local collective action problems in resource management. As a result,

outcomes are likely to be more effective, efficient, sustainable and equitable compared with

centralized arrangements (World Bank 2005).

There are various models of decentralization of property rights in irrigation which vary in

terms of their focus, scale, the management units responsible, and the scope of functions and

property rights transferred to farmers. According to Vermillion (1997), early models of

decentralization in irrigation (1950s to 1970s) - also referred to as irrigation management transfer

(IMT) focused more on non-poor, market oriented, large scale, and business like agriculture. The

objective of these early models include saving government money, improving operation and

maintenance (O&M), cost efficiency and maintaining or increasing productivity of irrigated

agriculture. The national government usually initiated the process and the scope included full

transfer of O&M and financial functions but ownership of assets remained with government.

In contrast, more recent models of IMT (1980s and 1990s) in South and Southeast Asia,

Latin America and Africa have been targeted at poor, small scale, local market oriented

agriculture. While the formal objectives remain the same, i.e. saving government money,

improving O&M cost efficiency and maintaining or increasing productivity, IMT has

increasingly been judged a success even if it only saved government money and improved

collection efficiency (Vermillion 1997). Contemporary IMT are also more likely to be

undertaken under donor auspices in previously aid funded projects (Shah et al. 2002).

In general, the scope of O&M and finance functions transferred under IMT is partial. In

particular, current models of IMT differ in their operational aspects in terms of a) transfer units

and their size (from canals to the entire system); b) the new management unit responsible after

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IMT; c) the extent of functions transferred; d) ownership of assets; and e) the implementation

and financing modalities adopted by donors.

Vermillion notes that the bundle of rights, powers and functions that are increasingly

devolved by the irrigation agency to farmer associations after IMT includes, in varying degrees,

the authorities to make decisions on: (1) rules and sanctions, with the maximum sanction of

stopping water available to the IAs; (2) O&M plan and budgets; (3) water charges; (4) hire or

release management staff; (5) control over intake; (6) control over main canal system; (7) control

over subsidiary canal system; (8) responsibility for future rehabilitation; (9) canal rights of way;

(10) right to contract and raise funds; and (11) right to make profits.

Following Vining and Weimer’s (1998) framework, these bundles of property rights can

be classified in terms of 1) completeness of allocation (i.e. the comprehensiveness of the rights

that specify the recognized duties and claims of the farmers’ IA with respect to the government

irrigation agency); 2) the cost of alienation of these bundle of rights (i.e. restrictions attached to

these rights for example they can only be alienated to bonafide members of the IA); 3) security

from trespass with more security leading to more socially efficient outcomes; 4) credibility of

persistence; and 5) autonomy (i.e. the extent of the rights of organizations to form, select their

own leaders and internal property rights, and to disband). As the meta-analyses suggests,

different countries that embarked on decentralization of irrigation property rights differ along

these relevant dimensions and as the meta-analysis of impacts suggest, these variations in the

features of property rights have an effect on the impacts of policy instruments.

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META ANALYSIS OF IMPACTS

Using meta-analysis, I examine the impacts of decentralization of property rights in

irrigation in terms of effects on poverty, productivity and sustainability of irrigation operation

and maintenance. A key underlying assumption behind decentralization of property rights in

irrigation is that it has a positive impact on poverty reduction and agricultural growth through its

effects on reducing the costs of water and diversification of revenue sources for water users’

associations. Reduction in the cost of water comes in the long term from increased water-use

efficiency. Diversification of revenue sources, on the other hand, results from the granting of

corporate powers and greater autonomy to the irrigation association (IA).

Impact on cost reduction

A meta-analysis of the literature suggests that the impacts of policy instruments on cost

reduction is mixed and contingent on the features of property rights that were decentralized.

Empirical evidence suggests that 1) where significant subsidies existed before decentralization,

the cost of irrigation to farmers may rise substantially; 2) where there is little or no change in

subsidies, decentralization may lead to a decrease in irrigation costs to farmers; and 3) high-cost

systems such as pump irrigation are more likely to significantly increase the cost of water to

farmers (Vermillion 1997). Overall, decentralization will not necessarily reduce the costs of

irrigated water to farmers where significant subsidies existed before decentralization particularly

for high-cost systems such as pump irrigation.

For example, Meizen-Dick and others (1997) report that decentralization in Senegal has

led to a 200 to 400 percent increase in the cost of water, mainly due to the significant loss of

government subsidies. Privatization of irrigation in the Senegal River Valley, which was irrigated

by lift pump schemes, led to a 78 percent increase in the cost of rice production for farmers

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between 1980 and 1993 (in constant 1980 prices) due primarily to discontinuance of subsidies

for credit, input provision, and irrigation. The positive side, however, was that over pumping

from lift irrigation was reduced as a result of improved supervision by farmer-hired staff. In

Indonesia, water charges to farmers increased five- to seven-fold as significant government

subsidies were reduced (Johnson and Reiss 1993). In the Dominican Republic, Yap-Salinas

(1990) reports a 1,500 percent increase in the cost of irrigated water over an eight-year period

when subsidies for pump irrigation were reduced.

On the other hand, where there is little or no change in subsidies, decentralization may

lead to a decrease in irrigation costs to farmers, particularly for surface irrigation. This was also

the case in the Philippines, where the cost of water declined by 75 percent (Oorthuizen &

Kloezen 1995); in Nepal, by at least 40 percent (Olin 1994); in the United States, by 16 percent

(Svendsen & Vermillion, 1994); and in New Zealand, by at least 25 percent (Farley 1994). In

these cases, farmers were granted financial autonomy that allowed them to determine irrigation

tariffs, collect and keep greater water revenues, and take cost-cutting measures. These measures

included reducing overhead costs and designing simpler repair and maintenance work, which

improved operational efficiency and resulted in lower costs of water delivery.

Impacts on farmer incomes

Scant information is available on decentralization impacts in terms of increased income,

gross value of output, and economic returns. In the United States, average farm incomes rose 15

percent due to reduction in water cost (Svendsen and Vermillion 1994). In Mexico, Johnson

(1996) reports that annual economic returns remained the same. In Colombia, the cost of water

relative to cost of rice production increased, but net farm incomes and gross value of output

increased substantially due to a shift to high-value crops.

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While the impacts of decentralization on irrigation costs and on agricultural yield in

general are ambiguous, it is clear that it can result in increased revenues to irrigation associations

or water user associations (WUA) as they grow into mature for-profit organizations. When

decentralization enables WUAs to diversify revenue sources and become profit-oriented (and not

just a non-profit service organization), this results in positive impacts. Diversified revenue

sources come from membership fees; seasonal and shareholder fees; trading of fertilizers and

agrochemicals; rice marketing; tractor rental and interest from small loans in Sri Lanka, from

farm enterprises in China and revenues from mini-hydro power stations, and water-selling

contracts and other income-generating projects in the United States.

Diversified revenue sources enable the WUA to venture into agriculture business

operations, such as wholesale procurement of farm supplies that help lower costs of farming for

its members, and to engage in cooperative marketing that helps increase farm prices (Kloezen

1996). WUAs venturing as multipurpose cooperative are also able to provide patronage refunds

in the form of cash and stock dividends to its members. In the Bayi District in Hebei Province in

China, the water user association was able to develop nine enterprises from1984 to 1992 after it

became financially autonomous. Sixty-five percent of its $60,000 profit was allocated for water

management costs; the rest was used as salaries and bonuses to workers, many of whom are also

members of the irrigation staff (Vermillion and others 1994).

Impact on production and productivity

In an assessment of small-scale IMT programs in West and Central Java, Indonesia,

Samad and others (2000) found that the potential for improving productivity or profitability of

irrigated agriculture through changes in irrigation system management was limited. The main

reason is that water and land resources were already intensively exploited. Cropping intensities

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are relatively high and water is generally recycled and reutilized between systems along river

courses. This was the key reason for the lack of substantial improvement in agricultural

productivity after irrigation decentralization.

In other countries, impact on cropping intensity is mixed. Cases in the Philippines, Sri

Lanka, India, China, Nepal, and Vietnam report increased cropping intensities ranging from 80 to

250 percent, which were generally attributed to more responsive irrigation operations after

decentralization (Wijayaratna and Vermillion 1994; Nguyen and Luong 1994; Kloezen 1996;

Kalro and Naik 1995; Uphoff 1992; Pradhan 2002).

However, in the Senegal River Valley, privatization of irrigated agriculture support

services was accompanied not only by a decline in cropping intensities, but by an expansion in

irrigated area. Farmers shifted to growing more of their crop only in the wet season, partly due to

rising input prices and the greater complexity of dry-season irrigation after IMT. In another

region, privatization led to a near doubling of irrigated area between 1985 and 1993 and an

increase in cropping intensity from 86 to 93 percent (Wester, During and Oorthuizen 1995).

Results for crop yields, however, were mixed and ambiguous and no information was generally

available.

In cases where irrigation operations improved—that is, when more water was made

available—there were reports of increased cultivated area, for instance 14 percent in Vietnam

(Nguyen and Luong 1994), and 80 percent in Nigeria during dry-cropping season (Musa 1994).

The increase in cultivated area in Nigeria resulted from significant improvement in water

distribution to tail-end areas. Crop diversification was reported in India, the United States, and

Colombia as a result of more flexible water distribution practices, emphasis on value-added

crops, and in response to market demands.

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In Mexico, the main impacts of irrigation decentralization were summarized by Kloezen

and others (1997) as follows: First, decentralization of control to famers has not led to major

improvements in operational performance, particularly in the way water is allocated and

distributed. There were also no changes in the area irrigated or cropping patterns that can be

attributed to decentralization. Second, decentralization has positive effects on managerial

accountability. Farmers are particularly positive about the improvement of services provided by

the ditch tenders. They feel that compared to the pre-decentralization period under the

government irrigation agency, the WUAs have more control over the ditch tenders’ work and

rent-seeking behavior.

Third, decentralization has led to a better match between actual expenditures and farmers’

perceived needs, especially in maintenance at lower system levels. Fourth, financial self-

sufficiency has increased from 50 percent to 120 percent after decentralization due to the ability

of the WUA to achieve fee collection rates at over 100 percent. The hiring of professional

administrative staff and the use of good computer software to handle daily financial

administration has resulted in better financial administration. Fifth, decentralization has not

resulted in an increase in the cost of water to farmers. Although the cost of irrigation to farmers

remains low after decentralization (less than 5 percent of gross value output), WUAs find it very

difficult to convince farmers that irrigations fees should be increased to keep up with inflation.

None of the WUAs also created a contingency fund for future emergency repairs. Finally, no

convincing evidence was found that decentralization had a substantial effect on agricultural and

economic productivity. Fluctuations were attributed more to the dismantling of credit and

subsidy systems, input price policies, and price changes in world commodity prices.

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CONCLUSION AND IMPLICATIONS

Using meta-analysis, I examined the impact of decentralization of property rights in a

common pool natural resource with irrigation as the empirical case. I framed the analysis of

property rights following Vining and Weimer’s framework for comparative policy and

institutional analysis. I find the framework useful for facilitating accumulation of comparative

information on institutions and thus useful for the development of comparative theories of policy

analysis.

I find that the outcomes of decentralization of property rights in irrigation differed among

countries in terms of cost distribution, incomes, productivity and sustainability of O&M. Table 1

provides a summary of the findings from the meta-analysis.

Table 1: The impacts of irrigation decentralization based on meta-analysis

Impact Positive impact more likely if…. Negative impact more likely if….

1. Productivity and povertyCost of Irrigation water

There is little or no change in subsidies; the effect on any increases in water costs is overcome by improvements in efficiency or water availability.

Significant subsidies are phased out, particularly in high-cost systems such as pump irrigation.

Productivity for all income levels

Head-tail end-water distribution improves to increase cropped area. Opportunities for productivity improvement are high (i.e. when water and land resources are not being intensively exploited, cropping intensities are low), as well as opportunities for multiple cropping and diversification due to more reliable and flexible water supply.

Little impact if land and water are already intensively exploited and cropping intensities already high; productivity may not be due to IMT but may be due to dismantling of credit and subsidy systems, input price policies, and price changes in world commodity prices.

Revenue diversification

Decentralization enables water user associations to diversify revenue sources and become profit-oriented, not just service-oriented. Increased revenue for WUA helps lower costs of farming, increases farm-gate prices, provides benefits to members, generates local employment, and stimulates local economy.

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Government Finance

Significant subsidies for recurrent O&M costs are phased out, including redundant staff. Collection efficiency increases; savings are reallocated toward supportive investments in the agriculture sector, or are used for support services such as credit, research and extension and farm-to-market roads, which are all vital for the success of IMT.

Future financial responsibility for rehabilitation is unclear or government commitment is not credible, such that farmers believe that government will always bail them out.

2. Sustainability Positive impact more likely if…. Negative impact more likely if….

O&M Decentralization of property rights is most progressive and complete such that WUAs are allowed to (a) make rules and sanctions; (b) make O&M plan and budgets; (c) set water charges; (d) hire or release management staff; (e) control intake; 6) control main canal system; (f) control subsidiary canal system; (g) be responsible for future rehabilitation; (h) have canal rights of way; (i) have right to contract, raise, and disburse funds and make profit; (j) have well-specified management functions and delineation of authority; (k) have effective accountability and incentives; (l) have arrangements for viable and timely conflict resolution; and (m) have adequate resources that can be mobilized for irrigation management.

Few or none of the progressive requirements of IMT are present; high operating costs such as in lift irrigation and when economic value of crops are low, as in paddy farming

Water conservation

(a) water is scarce but water rights and water service are clear, secure, and sustainable; (b) water is priced as an economic good; (c) consumption is adequately monitored at the farm level (i.e. use of volumetric pricing) and at the basin level (i.e. use of water accounting)

(a) water rights are unclear / insecure and thus little incentive to conserve; (b) water is priced as a social good; (c) poor monitoring of consumption, and transaction costs are high and more difficult

Source: Araral, 2006

I suggest that variation in outcomes of decentralization of property rights can be

attributed to a number of factors such as the physical, social and organizational contexts. The

meta-analysis also suggests that these variations can be explained by variations in the features of

property rights granted by national irrigation agencies to local farmer associations. Irrigation

agencies in developing countries have been pursuing decentralization mainly to reduce the

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recurring costs of irrigation and to shift these costs to farmers. Consistent with the expectations

of the public choice literature, concerns for efficiency and equity at best are incidental effects of

the incentives and constraints faced by irrigation bureaucrats.

Using the Vining and Weimer framework, these variations in property rights occur along

several dimensions: completeness of allocation, cost of alienation, security from trespass,

credibility of persistence, and autonomy. In some countries, the allocation of property rights was

more comprehensive and complete compared with others. In other developing countries, they

also differed in terms of the extent of security of trespass, credibility of persistence and

autonomy. The meta analysis revealed that irrigation decentralization models adopted in various

countries differ in their operational aspects in terms of 1) transfer units and their size (from

canals to the entire system); 2) the new management unit responsible after devolution (water user

association, local government, privatized management); 3) ownership of assets; 4) the

implementation and financing modalities adopted by donors and 5) the extent of functions

transferred.

The meta-analysis suggests that variation in the features of property rights among

different countries could help explain variations on the impacts of policy instruments. For

instance, decentralization of property rights in irrigation is more likely to have positive impacts

on water resource conservation when water rights are comprehensive, clear, secure and credible

and when the WUA have autonomy. It is more likely to have positive impacts on cost of

irrigation water when there is little or no change in subsidies and that the effect on any increases

in water costs is overcome by improvements in efficiency or water availability. Shah et al. (2002)

have also argued that even when the supposed institutional preconditions for success are met, i.e.

supportive legal-policy framework, secure property rights, local management capacity building,

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and an enabling process to facilitate management transfer, success is more likely under large

scale and high value crop farming than in small scale agriculture involving thousands of

impoverished farmers.

Decentralization is also more likely to have positive impacts on O&M when property

rights is most progressive such that WUAs have right to (a) make rules and sanctions; (b) make

O&M plan and budgets; (c) set water charges; (d) hire or release management staff; (e) control

intake; 6) control main canal system; (f) control subsidiary canal system; (g) be responsible for

future rehabilitation; (h) have canal rights of way; (i) have right to contract, raise, and disburse

funds and make profit; (j) have well-specified management functions and delineation of

authority; (k) have effective accountability and incentives; (l) have arrangements for viable and

timely conflict resolution; and (m) have adequate resources that can be mobilized for irrigation

management. In Vining and Weimer’s framework, this refers to the principle of complete, clear

and secure allocation of rights and the WUA having autonomy. In larger systems,

decentralization is more likely to be successful when governing boards are farmer elected,

management is made up of professional cadres, and legal systems can handle increasing scales of

complexity (principle of autonomy).

Decentralization has also positive impacts on revenue diversification for the WUA if it

enables water user associations to diversify revenue sources and become profit-oriented, not just

service-oriented. Increased revenue for WUA in turn helps lower costs of farming, increases

farm-gate prices, provides benefits to members, generates local employment, and stimulates local

economy.

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