Understanding clients, providers and the institutional dimensions of irrigation services in developing countries: A study of water markets in Bangladesh

The average Bangladeshi consumes more than 171kg of rice per year. Despite the is ranked 93rd among 239 countries of the world in terms of the physical size, the country is the 8th largest populace country in terms of the total population which is more than 164 million in 2017. Bangladesh has nonetheless largely achieved rice self-sufficiency. This development has been enabled in part by the rapid proliferation of small-scale irrigation pumps that enabled double rice cropping, as well as by a commercialized and competitive market system in which farmers purchase water from irrigation service providers. Excess groundwater abstraction in areas of high shallow tube-well density and increased fuel costs for pumping have however questioned the sustainability of Bangladesh’s groundwater irrigation economy. To ensure sustainability, cost-saving agronomic methods can be widely deployed aligning with policies, markets, and farmers’ incentives. We consequently studied the different institutions and water-pricing methods for irrigation services that have emerged in Bangladesh, each of which varies in their incentive structure for water conservation, and the level of economic risk involved for farmers and service providers. Using primary data collected from 139 irrigation service providers and 556 client farmers, we empirically examine the structure of irrigation services (hourly, seasonal with/without client pump fuel and crop sharing) and associated market and institutional dimensions. Our findings demonstrate that competition among pump owners, social capital and personal relationships, and economic and agronomic risk perceptions of both pump owners and farmers significantly influence the structure of irrigation service and water pricing method. Greater competition among pump owners increases the likelihood of hourly services and reduces the likelihood of crop-sharing arrangements. Based on these findings, we explore some policy implications for enhancing irrigation services and sustainability in Bangladesh.