Management of common property resources : intertemporal exploitation of village dams in Sri Lanka

Abstract

Village dams in Sri Lanka are owned in common by the villagers and the water in them is used for in-situ public good purposes and for the irrigation of their private rice lands. The water resource of the dam is replenished every year by the runoff from its catchment during the monsoons. Within a year, the water storage is dynamic, being influenced by periodic inflows and evaporative losses. The advent of the new rice technology, consisting of high-yielding and short-aged varieties of rice, has increased the scarcity value of water. However, there are inherent inefficiencies in its exploitation due to commonality. Making use of a two-period model and the concept of user cost, the common ownership of the dam and its contents have been shown to lead to inefficiently heavy extractions of water during the Wet Season with the result that the scarcity in the Dry Season is exacerbated. This inefficiency has been shown by comparing the net social benefits under the commonality allocation and that under the efficient allocation. The analysis incorporates explicitly the substitution possibilities between land and water so that the optimal land area is chosen for each level of application of water. The empirical approach developed in the thesis involves two aspects. First, the water storage is characterized by a transfer function model. A monte carlo simulation model, developed on the basis of this, is used to simulate the water storage behaviour for a number of years. Second, the marginal net social benefits for water use in the Wet Season and the associated user costs are derived. This utilizes a simulation model of the crop irrigation system, which is placed within a discrete dynamic programming framework. The water storage and the soil moisture are included as the state variables. This model implements the efficient intraseasonal distribution of a given amount of water. Crop response functions derived via this for different areas of rice are used to define a crop response frontier and a user cost frontier. At an efficient interseasonal allocation, the marginal net social benefit and the marginal social cost are equated. The commonality allocation of water and the associated net benefits are derived by a simulation of the traditional irrigation and growth of rice. The analysis is repeated for several rainfall years. This analysis enables the efficiency gain due to the resolution of commonality and the gain due to the adoption of the new technology of rice production to be estimated separately. On an average, the efficiency gain has been estimated to be approximately 25 per cent of the overall gains* The analysis also determines the optimal use tax and the allocation of land and water in each of the two seasons. Show more