An estimation of the economic value of irrigation water for wheat production at sable farms

Abstract

Water is a finite and vulnerable resource which plays a vital role in economic development.It needs to be managed through demand management (pricing) other than supply management. This study was carried out at Sable farms in Lusaka District of Lusaka Province, Zambia. The main objective of this study was to suggest a methodology to evaluate the economic value of water. Knowledge of value for the resource can help in the process of proper pricing, the widely and most effective demand management tool. Both primary and secondary data used in this study were collected using structured and semi structured questionnaires. Although many methods are available for valuing of resources, residual method has been rated the best for valuing environmental goods like water. The study therefore used this method to value water used for irrigation of wheat at sable farms. Sable farms use about 5130m^ of water per hectare of wheat during the entire growing period of wheat. Each cubic meter of water used to irrigate wheat generates an income of about ZMK 1,000 for the farmer. The financial and economic values of water used for irrigation of wheat at sable farms were found to be ZMKIOOO (US$0.21) and ZMKl 120 (US $0.23) per cubic meter respectively. These values indicate that the current price of water in Zambia which ranges from ZMK2/m'^ to ZMKlO/m^ is far below its economic value (ZMKl 120/m''). Residual imputation method proved to be a useful way of valuing water. The government should therefore encourage further research in this area through UNZA's IWRM Centre. The government should also come up with policies which will encourage water audits for all commercial farms in Zambia and consider the possibility of pricing water used for agriculture.