For many years we have been interested in and have worked on problems of irrigation management in Third World countries. During the mid 1980s, both of us came to focus our attention on the increasingly difficult problems that governments faced with respect to financing the costs (especially the recurrent costs) of irrigation. Small, during a two year leave from Rutgers University spent at the newly established International Irrigation Management Institute (IIMI) in Sri Lanka, undertook an extensive study of irrigation financing policies that included a literature review and case studies of Indonesia, South Korea, Nepal, the Philippines and Thailand. The study was funded by the Asian Development Bank as part of a Regional Technical Assistance activity. At about the same time Carruthers was undertaking a similar study, funded by the United States Agency for International Development (USAID) and managed by Devres Inc. of Washington D.C., which included case studies of policies in the Dominican Republic, Indonesia, Morocco, Peru and the Philippines. Both of these studies reflected the concern of international lending and donor agencies, as well as national agencies, that financial difficulties were becoming a serious constraint on irrigation performance.

Our studies have convinced us that financial policies can have important effects on irrigation performance. We are also convinced that economic perspectives and insights provide a powerful approach to the analysis of alternative financial policies of irrigation – an approach which we believe can be appreciated and used by policy makers and irrigation managers regardless of the nature of their specialised training.