Institutional Economics Approach to Irrigation Management with Special Reference to Developing Asian Countries

Many countries in Asia, Africa and Latin America have turned over irrigation systems to farmer groups. There is general consensus that neoclassical economics has failed to address many issues in irrigation water management. Institutional issues have been at the heart of some of these failures. The New Institutional Economics (NIE) has been used by policy makers to address issues with respect to irrigation water manageemnt. The NIE by focusing on transactions costs and collective action procedures were able to overcome some of the critical bottlenecks in improving productivity of irrigation. The NIE also highlights the need to pay attention to the informal institutions such as rotational irrigation in developing countries and initiate irrigation management transfers to water user associations. The WUAs have shown much promise yet many problems need to be resolved to further improve irrigation water use. Water pricing is still at its infancy despite some limited experiences. Until the institutional and technological problems are simplified pricing will remain less effective.