Measuring Benefits to Operation and Maintenance Expenditure in the Canal Irrigation System of Pakistan: A Simulation Analysis

Muhammad A. Chaudhry and Mubarik Ali

Agricultural Economics, 1989, vol. 3, issue 3, 199-212

Abstract: Estimates regarding benefits to O&M investments help rationalize financial allocation decisions. A distributed lag model is used to estimate the contribution to agricultural productivity of funds utilized for O&M of the canal system in Pakistani Punjab. Estimated parameters are used to simulate the effects of alternative O&M investment scenarios on agricultural output, farm prices and income. Marginal benefits to past and prospective O&M investments in the canal irrigation system were found to be fairly high, suggesting the need to allocate more funds for O&M of the canal system. Results indicate that O&M investments yield substantial gains to both producers and consumers, implying that funds required for O&M activities could be generated by taxing both these segments of society.

Date: 1989
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