Introduction

Governments in many nations have invested large amounts of money in irrigation projects. More than $500 billion of capital has been spent. This is on the expectation that such investments would repay their costs and more generally foster economic growth and development. Realisation of this expectation clearly requires that projects be operated in a reasonably effective manner, and this in turn requires that an appropriate schedule of maintenance is followed. But irrigation operation and maintenance (O&M) are frequently reported to be highly inadequate, and this is thought to be a major contributing cause to the disappointing levels of agricultural productivity. This substandard O&M will depress economic returns to many irrigation investments.

These problems with O&M suggest two important policy issues with respect to irrigation financing: how to obtain finance and how to utilise the funds wisely. The relationships between these issues are illustrated in Fig. 4.1. The concern with obtaining finance is indicated in the upper left-hand portion of the figure, which shows funding decisions determining the amount of funds available for O&M. The issue of the utilisation of the funds involves consideration both of expenditure decisions that provide the irrigation agency with the physical resources to undertake O&M, and resource-utilisation decisions regarding the deployment of these resources in O&M activities. Fig. 4.1 illustrates the importance of all three types of decisions (funding, expenditure and resource-utilisation) on the ultimate effectiveness of O&M.