Irrigation Sector in Sri Lanka: Recent Investment Trends and the Development Path Ahead

Abstract

"The total investment in the irrigation sector of Sri Lanka, during the period of a decade and a half from the early 1980s to the mid-1990s, declined drastically to one seventh of its peak level in the early 1980s due a drop in public irrigation investments. Of the three types of public investment, new irrigation construction recorded the sharpest decline. Although the percentage for rehabilitation in the total irrigation investment increased, its absolute amount declined from the mid-1980s to the mid-1990s. The operation and maintenance (O&M) expenditure remained stagnant in the last two decades, and has declined since the mid-1980s. For the total irrigated area, which increased by 10 percent (50,000 ha) during this period, O&M expenditure per hectare declined considerably.

"The total irrigation investment in the last half decade, showed a slight upward trend from its rock bottom level in the early 1990s. However, the relative composition of investment was entirely different from what it was before the early 1990s. Investment on rehabilitation increased and constituted the largest share in the total irrigation investment for the first time while investment in new irrigation construction continued to shrink. Also remarkable is the rapid increase in private irrigation investment. The investment on agro-wells and irrigation pumps by farmers was negligible until the end of the 1980s, but increased rapidly in the 1990s, exceeding the O&M expenditure for the entire major irrigation schemes by a wide margin. The rapid decline in new irrigation construction, which resulted from the drastic decline in its profitability and its sharply rising cost, in real terms, was a major factor choking off any incentive for new investment. The low rice price since the collapse of the commodity boom in the mid-1980s discouraged the government and international donor agencies from investing in new irrigation construction. Though very drastic, reduction in new construction investment is what can be expected at the present stage of development in irrigated agriculture."