Agricultural Systems 60 (1999) 99±112

www.elsevier.com/locate/agsy

Environmental±economic decision-making in lowland

irrigated agriculture using multi-criteria analysis techniques
D.N. Tiwari a,*, R. Loof b, G.N. Paudyal c
a
PO Box 12609, Kathmandu, Nepal
b
School of Civil Engineering, Asian Institute of Technology, Bangkok, Thailand
c
Danish Hydraulic Institute, Gulshan Road, Dhaka, Bangladesh

Received 30 January 1998; received in revised form 20 November 1998; accepted 26 February 1999

Abstract
The continuing debate on sustainability has raised wide concerns towards integration of environmental and eco-
nomic aspects into the development decision-making process. This paper develops a framework for environmental±
economic decision making that includes the environmental and economic sustainability criteria, and local people's
preferences in the context of a lowland irrigated agriculture system using multi-criteria decision-making techniques.
Several criteria, such as land capability/suitability, energy input/output ratio, water demand and environmental costs,
are considered as environmental sustainability criteria. Economic sustainability is measured from farmers', govern-
ments and societal viewpoints using extended cost-bene®t analysis. The Geographic Information System (GIS) tech-
nique has been used to evaluate spatial sustainability criteria. The involvement of local people at various levels of the
decision- making process is emphasized and their opinions are sought in the decision-making process using a two-stage
®eld survey. The results of the multi-criteria analysis combining both environmental and economic sustainability
criteria are discussed, and economic incentives for sustainable intensi®cation of lowland irrigated agriculture are out-
lined. # 1999 Elsevier Science Ltd. All rights reserved.
Keywords: Economic sustainability; Economic incentives; Environmental±economic decision making; Environmental sustainability;
Multi-criteria analysis

1. Introduction there has been some progress in developing eco-

The continuing debate on sustainability raised
wide concerns towards integration of environ-
mental and economic aspects into the decision-
making process. Decision-making techniques at
the project level have long been dominated by the
conventional cost-bene®t analysis (CBA), where
only the quanti®ed direct costs and bene®ts are
incorporated into the analysis. In recent years
* Corresponding author.
0308-521X/99/$ - see front matter # 1999 Elsevier Science Ltd. All rights reserved.
PII: S0308-521X(99)00021-9
nomic valuation methods and addressing sustain-
ability concerns into the CBA (Barbier et al., 1989;
Bojo et al., 1992; Pearce, 1994; Tiwari, 1996).
However, reality is complex, and the use of CBA
alone may not be sucient when the decision
situation involves consideration of variables which
cannot be easily quanti®ed into monetary units,
and the decision-making process is likely to be
in¯uenced by multiple-competing criteria. The
complexity involved in the economic valuation,
the time dimension, diversity of environmental
100 D.N. Tiwari et al. / Agricultural Systems 60 (1999) 99±112
and natural resource scarcity e€ects, and local
people's concerns, etc., sometimes present pro-
blems for monetization of all the criteria, espe-
cially in the context of developing countries.
Opinions may diverge in the long-term, as more
e€orts can be expected towards economic valua-
tion, incorporation of environmental externalities
into the economic calculus, internalization of these
costs and bene®ts, adoption of clean technologies,
etc., ultimately may help in arriving at a `win-
win' situation. In the short-run, however, where
environmental±economic decision-making pro-
cesses are constrained by lack of information for
monetization of all the variables and criteria, and
the technological change is also dicult to take
place, some compromising solution has to be
sought. The decision-making techniques, in such a
context, should be redirected towards formulation
of alternatives which meet various sustainability
criteria and help to arrive at the best compromis-
ing solution for making a transition towards
sustainable use of natural resources. In such a
situation, multi-criteria decision-making (MCDM)
techniques are particularly helpful in taking into
account the outcomes of monetary valuation,
ecological analysis, and local people's perceptions
as well as decision-makers' viewpoints in the
decision-making process.
2. Theoretical basis for environmental±economic
decision making
Various MCDM techniques have been devel-
oped and applied in the past for regional planning,
agricultural land and water management pur-
poses. Recently, the use of MCDM techniques
has been emphasized for application in environ-
mental±economic decision making where all the
objectives, or criteria cannot be quanti®ed in
monetary units (Munasinghe, 1992). The choice of
a particular method for environmental±economic
decision making, however, is guided by a trade-o€
between comprehensiveness and objectivity (Jans-
sen, 1991). Although a more comprehensive
approach is needed for environmental±economic
decision making, a fully comprehensive approach
is dicult to apply in the context of developing
countries due to lack of information (El Serafy,
1991). Likewise, the extent of comprehensiveness
of the method to be adopted also depends upon
the nature of local speci®c environmental issues,
and sustainability concerns to be addressed while
making decisions at the project level.
Various studies in the past have used MCDM
techniques in making environmental±economic
decisions. For example, Hafkamp and Nijkamp
(1986) used MCDM techniques for integrated
economic±environment±energy policy analysis.
The multi-regional model was developed con-
structing mutually interactive three parallel lay-
ersÐeconomic, employment and environmentÐ
using compromising programming (CP) techni-
ques. Zekri and Romero (1993) used the MCDM
approach to ®nd a best compromising solution
combining various public and private concerns,
such as net present value (NVP), employment,
water consumption and energy use, in agriculture.
Likewise, Laxminarayanan et al. (1995) used a
multi-objective modeling approach for making
decisions involving trade-o€ between soil erosion
and water quality. Although these various e€orts
made in the past have attempted to incorporate
both the economic and environmental dimensions,
it is equally important that people's perceptions
are also considered while making decisions. While
developing a framework for environmental±eco-
nomic decision making, these various criteria and
concerns have to be taken into consideration. In
this paper, the use of two widely popular MCDM
techniquesÐCP and analytical hierarchical pro-
cess (AHP)Ðis demonstrated by presenting a case
study of the Phitsanulok irrigation project (PIP)
located in the Northern Plains of Thailand.
2.1. CP
CP is a distance-based technique designed to
identify non-dominated solutions which are clo-
sest to an ideal solution using a quasi distance
measure (Zeleny, 1982). Policies for environ-
mental±economic integration are often concerned
with removing threats to the environment, and
trying to reach a certain desired state of environ-
ment (e.g. within the land capability, or suitability
limits) rather than maximizing the overall results
 D.N. Tiwari et al. / Agricultural Systems 60 (1999) 99±112
of the alternatives at a time. In a review of the
recent developments in decision-making techni-
ques, Hippel (1992) concluded that application of
MCDM techniques provides a sound basis for
solving water resources management problems to
satisfy the goals of sustainable development. For
application of a MCDM technique such as CP in
environmental±economic decision making, a set of
criteria can be developed and used for arriving at
the `best compromising' solution for making the
transition towards sustainable use of resources.
In CP, the ideal point or the solution is de®ned
as the best score on each criterion within a given
set of criteria which serves as a reference point,
because, in real practice, it is almost impossible to
have an ideal solution. In this context, the alter-
native that is a `closest' to the ideal point becomes
the highly preferred one. This closeness to the
ideal point is determined using a family of stan-
dardized Lp matrices and is mathematically ex-
pressed as:
X
N   problems (Golden et al., 1989; Saaty, 1993;
p 1=p
Lp …Aj † ˆ … i …… f i ÿ fij †=… f i ÿ f 
i †† †
iˆ1
where Lp (Aj) is the distance matrix, which is a
function of the decision alternative Aj, and the
parameter p; i is the standardized form of the cri-
terion weight wi and:
X
w
i ˆ w i = wi ;
iˆ1
f i is the ideal or best value for criterion i; and f 
i irrigation system known as the Phitsanulok irri-
is the minimum or worst value for criterion i.
The scaling co-ecient in the ®rst equation, p,
which is a parameter, makes it possible to include a
relationship between relative size of the e€ect and
weight into the decision rule (Janssen, 1991). If
there is a relationship such as the balancing of the
criteria, p must be 1; if there is decreasing marginal
utility, then p must be higher than 1. The value of p,
in general, depends upon policy objectives. When
only the highest value is important, p must be in-
®nitive. For each of these cases, the objective
function equation is reduced to a di€erent form.
101
2.2. AHP
The AHP is a decision-aided method which de-
composes a complex multi-factor problem into a
hierarchy, and each level is composed of speci®c
elements. It uses hierarchic structures, matrices
and linear algebra to formalise the decision pro-
cesses (Saaty, 1980). The AHP method determines
the priorities of each alternative with the assigned
weight for each alternative by analysing the judg-
mental matrices using the advanced mathematical
theory of eigenvalues and eigenvectors. It inter-
prets the eigenvector associated with the largest
eigenvalue as the priorities that indicate the
importance of each alternative in accomplishing
the objective. AHP combines both subjective and
objective judgements in an integrated framework
based on ratio scales from simple pairwise com-
parisons. Saaty (1980) provided a theoretical
foundation for AHP. Since then the use of AHP
techniques has been made in di€erent sectors for
analysing complex environmental and economic
; …1†
Alphonce, 1997). The use of AHP stems from its
simplicity, ¯exibility and its ability to incorporate
decision-makers' perceptions as well. The theore-
tical framework for application of AHP can be
found in Saaty (1980) and Schoner and Wedley
(1989).
3. Study area
The study area is located in the Northern Plains
of Thailand, about 500 km north of Bangkok. The
gation project (PIP), consists of a main canal of
176 km. The study area, which is a sub-project of
the PIP, is one of the largest irrigation systems in
the country. The irrigation system consists of a
main canal, 96.0 km from the headwork to the end
of this sub-project (here after referred as the pro-
ject), and is divided into 39 sub-zones for the pur-
pose of water management. The total area was
divided into three zonesÐhead, middle and tail.
The ®eld survey was carried out in May 1994,
immediately after the rice harvest. The total sample
population surveyed consisted of 209 households
102 D.N. Tiwari et al. / Agricultural Systems 60 (1999) 99±112
out of a total 12,000 households. About 86% of
the population surveyed were entirely dependent
upon agriculture, the remaining 14% having some
family members employed in government jobs,
private companies and daily wage activities. By
landholding size, the majority of farmers (55%)
had 1.6 and 3.8 ha, 27% above 3.8 ha and the rest
18% with less than 1.6 ha per family. The level of
income generated from agricultural activities
alone showed the likely impact of the project on
raising the living standard of people. However,
based on the family income, and an average family
size of 4.6, about 32% of the farmers in the project
area were estimated to be living below the basic
needs level.
4. Conceptual framework
Fig 1 shows the overall conceptual framework
for environmental±economic decision making at
the project level in the context of lowland irrigated
agriculture. The framework consists of three main
Fig. 1. Conceptual framework for environmental±economic decision making using multi-criteria analysis.
componentsÐenvironmental, economic and spa-
tial database management. The environmen-
tal component is divided into two partsÐland
capability/land suitability analysis and resource
accounting. The resource accounting sub-compo-
nent further consists of two partsÐestimation of
energy input/output ratio and the environmental
costs. The irrigation water supply and demand is
also considered as part of this sub-component.
The economic component is divided into two
partsÐeconomic valuation and CBAÐconsider-
ing the economic value of irrigation water from
farmer's, societal and government viewpoints.
Both the ®eld survey and the application of a
Geographic Information System (GIS) formed
the core part of spatial database management.
Finally, multi-criteria techniques are used for
making decisions among the selection of alter-
natives governed by these various environmental,
economic and societal criteria. The next section
provides methodological steps developed for
environmental±economic decision making using
multi-criteria framework.
 D.N. Tiwari et al. / Agricultural Systems 60 (1999) 99±112
5. Procedural steps in environmental±economic
decision making
5.1. De®ning sustainability criteria and setting
objectives
De®ning sustainability criteria is the ®rst basic
step towards developing an analytical framework
for environmental±economic decision making.
Lowland irrigated areas have always been a major
concern for sustainable intensi®cation of agri-
culture. Concerns over maintaining food security
as well as reducing pressure on the upland fragile
ecosystem in developing countries is closely rela-
ted to the resource use patterns and productivity
of the lowland ecosystems. On the other hand,
increasing water resource scarcity and resource use
patterns, and externalities associated with the
lowland irrigated agriculture, etc., have raised
serious questions on the capability of these eco-
systems to sustain long-term productivity and
provide food security to the ever increasing popu-
lation. Natural resource and environmental scar-
city issues, such as water scarcity, increased use of
agrochemicals for maintaining farm productivity,
increasing waterlogging and soil salinity, surface
and ground water pollution, and increased health
e€ects of pesticides, are drawing wide attention.
De®ning sustainability criteria in operational
terms is the ®rst basic step towards integrating
these wide concerns into the multi-criteria analy-
sis. Although there is some disagreement about
operational de®nition of sustainability, some
speci®c criteria can be set out as to what it means
at the project level for incorporating various
environmental and societal concerns. From the
standpoint of the environment (or ecological sus-
tainability criterion), less reliance on dangerous
forms of agrochemical (fertilizers and pesticides)
and diverse crop rotations are preferred than ones
that are less diverse (OECD, 1995). Moreover,
de®nition of sustainable agriculture is widened
further as environmentally non-degrading, eco-
nomically viable and socially acceptable (FAO,
1991). Developing sustainability criteria at the
project level, thus, varies from de®ning the con-
cept as maintenance of resource productivity over
time to a socially acceptable agricultural system,
103
and can be outlined as: (1) maintenance of the
resource base such as soil quality; (2) low depen-
dence on external inputs and lower waste genera-
tions; (3) economic viability; and (4) local farmers'
acceptability. While the conventional approach
such as land capability and suitability analysis is
considered as a governing criteria for maintaining
the resource base over the long-run, energy input/
output ratio and NPV with consideration of the
environmental cost from farmers' government and
societal perspectives are considered as environ-
mental and economic indicators re¯ecting criteria
(2) and (3). Local people's preferences and their
choices among various available alternatives are
considered as farmers' acceptability criteria.
5.1.1. Land capability/suitability criteria
In the case of lowland irrigated agriculture, this
criterion is related to the maintenance of the soil
resource base and agricultural productivity. How-
ever, it is rather dicult to measure the soil nutri-
ent balance and its productivity over time, and
provide its value in economic terms. Nevertheless,
spatial sustainability analysis combining land
capability and suitability provides a sound basis as
governing criteria for maintaining the soil resource
productivity over the long-run, and integration of
ecological sustainability criteria into the CBA.
This involves selection of cropping patterns by
assigning and ranking threshold values related to
di€erent soil characteristics and topographic fac-
tors as a set of constraints a€ecting the soil quality
and agricultural productivity. The land capability
and suitability analysis based on soil and drainage
characteristics provide an optimum limit for
change in cropping patterns during the dry season.
The objective is, thus, to maximize the total crop-
ping area based on land suitability analysis and
the selection criteria are governed by the max-
imization of the total area.
5.1.2. Energy output/input ratio
One main concern for achieving sustainability is
to increase the resource use eciency. Various
studies in the past have shown that the modern
agricultural system is highly inecient. The max-
imization of resource use eciency as measured by
the energy output/input ratio for each particular
104 D.N. Tiwari et al. / Agricultural Systems 60 (1999) 99±112
crop provides a basis for selection of the most
ecient area allocation for increasing resource use
eciency.
5.1.3. Water requirements
The selection of the mix of crops that utilizes the
minimum water in the dry season is the main
concern for solving the water scarcity problem.
The objective is, thus, to minimize the total water
requirement while trying to satisfy the farmers'
demand for cultivation of various crops.
5.1.4. Environmental costs
Both the on-site and o€-site environmental costs
of lowland irrigated agriculture, such as crop
damages due to waterlogging and ¯oods, potential
surface and ground water pollution due to the
excessive use of pesticides and chemical fertilizers,
and on-farm costs to the farmers, such as crop
damages by insect attacks, etc., have to be mini-
mized for a sustainable agriculture system. The
objective is, thus, to minimize these environmental
costs.
5.1.5. Economic viability with considerations of
government, farmers' and societal viewpoints
Economic viability refers to the ability of the
lowland irrigated agricultural system to retain an
acceptable level of pro®tability even when external
costs, such as environmental damage costs and
resource scarcity prices, are internalized, or incor-
porated into the economic analysis. To achieve
economic sustainability, the net economic bene®t
derived should at least be constant over the pro-
ject life period, and it should generate surplus for
investing in maintaining the resource productivity.
The objective is, thus, to maximize the NPV. As
outlined in Section 2, the economic viability cri-
teria are de®ned from three di€erent perspectives,
government, farmers' and societal viewpoints, and
each of them are brie¯y de®ned in the context of
this paper.
5.1.6. NPV from government viewpoints
While carrying out CBA of an irrigation project,
usually the economic price of irrigation water is
considered equal to that of the cost-recovery
amount including operation and maintenance
costs. Governments and donor agencies are more
concerned with the cost-recovery of the project,
and this approach of consideration of water price
equal to that of the cost-recovery amount is refer-
red to in this paper as carried out from the ``gov-
ernment viewpoint'', which follows the normal
procedure of CBA. Due to growing scarcity of
water, the objective of the Royal Irrigation
Department of Thailand has been to minimize the
rice plantation in the project area in order to save
the water during the dry season. Another objective
has been to raise and collect the water fees for
meeting the project costs. The objective is then, to
maximize the NPV, in this case government's
NPV, computed assuming the economic value of
irrigation water equal to that of the cost-recovery
amount, and with incorporatation of environ-
mental costs.
5.1.7. NPV from farmers' viewpoints
From the farmers' viewpoint, they are supposed
to receive an opportunity to cultivate during the
dry season according to their household needs and
preferences, and that they would not prefer to pay
water fees exceeding their willingness to pay. In
this case, the economic value of water is assumed
equal to that of farmers' willingness to pay, and
the estimation of NPV, in this case, is considered
as from ``farmers' viewpoint''. Likewise, while
calculating NPV from the farmers' perspective,
only the on-farm crop damage costs, directly
accrued to the farmers are considered. The objec-
tive as in the last case is the maximization of
NPV computed considering these various factors
outlined.
5.1.8. NPV from societal viewpoints
From intergenerational viewpoint, however,
scarcity value of irrigation water will have to be
considered. The NPV in this case is estimated
assuming water price equal to the marginal value
product, or the scarcity rent of water and is con-
sidered as carried out from ``societal viewpoints''.
In addition, environmental costs are also incorpo-
rated as in the case of government viewpoints.
From societal viewpoints, both of these factors,
environmental costs and scarcity value of water,
are highly important. While the objective is to
 D.N. Tiwari et al. / Agricultural Systems 60 (1999) 99±112
minimize these costs, the set out objective is, then,
the maximization of societal NPV.
The computation of NPV from three di€erent
perspectives as the governing economic criteria,
however, should not be confused with the normal
CBA procedures which per de®nition is a type
of analysis that is made from the view of society.
For example, if a project is found optimal from
the view of society, it is not all-optimal for all the
individuals that are a€ected by the project. In
such a case, paying them compensation for the
loss they su€er can provide a solution; how-
ever, as Morgenstern (1998) argues in his paper,
the compensation mechanism is never truly
designed and applied in practice. The CBA pro-
cess, in this case, only di€ers in the computation
of NPV while including the resource price or the
value of water, as farmers' willingness to pay for
irrigation water at present may not truly re¯ect
the scarcity value of water as farmers still con-
sider water, as a free gift of nature in develop-
ing countries. Second, conventional CBA, which
considers resource price only, based on the cost-
recovery considerations, may be di€erent when
the scarcity value of such resources is considered.
These three cases of computation of NPV using
three di€erent values of water cost-recovery,
farmers' willingness to pay and scarcity value of
water, termed as government, farmers' and socie-
tal NPV, respectively, still follow the normal
CBA procedures. The computation of NPV in
these three cases represent three sub-criteria of
economic viability.
5.1.9. Local farmers' acceptability
Another major concern of agriculture sustain-
ability is the local farmers' acceptability. Local
farmers' preferences play a very signi®cant role
both in the design and implementation of alter-
natives aimed at sustainable use of resources.
Alternative methods designed without local
farmers' acceptance, even though environmen-
tally sound, but may not be easy to implement.
Implementation of market-based instruments,
such as water charging system for ecient use of
irrigation water, may also be dicult without
knowing local people's willingness to pay for
it. Thus, local people's preferences are important
105
to know in determining the economic value of
irrigation water, environmental costs, and de-
signing alternative cropping patterns. Local
farmers' preferences, on the other hand, are
determined by their household needs. The deci-
sion is carried out by a household to meet these
needs, and can be elicited using both the direct
(willingness to pay) and indirect (ability to pay)
economic valuation techniques. Besides, measur-
ing and using farmers' willingness to pay for irri-
gation water, local people's preferences are
incorporated while developing alternative crop-
ping practices and in the decision-making process
using a structured questionnaire for pairwise
comparisons of di€erent sustainability criteria
and sub-criteria.
5.2. Formulation of alternatives
Ten alternatives (Table 1) were formulated for
helping to solve the water scarcity problem and
making the transition to sustainable agriculture
through crop diversi®cation based on land cap-
ability/suitability analysis, water availability, local
farmers' perceptions and including existing and
worst case scenarios as well for dry season crop-
ping in the project area.
5.3. Integrating output from spatial analysis using
GIS, resource accounting and economic valuation
for multi-criteria evaluation
Multi-criteria evaluation techniques involve
quanti®cation of several criteria outlined in step
one. The output generated from spatial analysis
using GIS provides a basis for di€erent physical
environmental criteria such as land capability/
suitability, energy output/input ratio, and envir-
onmental costs, and design of di€erent alter-
natives on a cropwise basis. The economic value
of irrigation water obtained from di€erent direct
(willingness to pay) and indirect (marginal value
product, marginal construction costs, scarcity
rent, etc.) methods (Tiwari, 1998), was incorpo-
rated into the extended CBA for estimating the
NPV from di€erent viewpoints. The output
obtained for di€erent criteria under di€erent
alternatives is shown in Table 1.
106 D.N. Tiwari et al. / Agricultural Systems 60 (1999) 99±112

A1, continuation of existing cropping patterns; A2, priority for rice cultivation; A3, priority for non-rice crops in highly suitable areas; A4, no cultivation in low-
ÿ665.92
ÿ410.03

resource areas; A5, cropping patterns according to farmers preference; A6, direct reduction in water supply (area with distance <4 km from main canal); A7, direct
reduction in water supply (area with distance >4 km from main canal); A8, creation of ecological bu€er zone along Yom River bank; A9, the best case: rice cultivation
5.4. Decomposition of sustainability criteria on a

493.38
hierarchical basis
A10

0
0
0
0

ÿ280.82
Application of multi-criteria techniques such as
166.19
994.73

AHP for incorporating local people's and decision

34 765

28.68
355
A9

4.8

makers' perceptions involve setting each of the

indicators/criteriaÐeconomic, social and envir-
onmentalÐinto several descending levels of hier-
ÿ107.61

ÿ69.32
432.59
29 795

10.41

archy. Schoner and Wedley (1989) pointed out

213
A8

5.5

that the elements (sub-indicators) under each node

(main indicator group) should be less than nine
ÿ297.92

items, and items should be homogenous as well as

ÿ40.78
ÿ219.7
13 320

6.49

within one order of magnitude. If they are hetero-

108
A7

5.2

geneous or di€erent by more than one order of

magnitude, then they should again be broken
30.571
346.08
20 965

95.36

down into sub-groups of similar nature and mag-

6.39
144
A6

5.6

nitude.
As shown in Fig. 2, the main goal is to achieve
607.14
684.89
1175.9
34 757

10.89

the sustainability of the agricultural system in the

239
A5

5.6

area. The sustainability goal is then broken in-

to two criteriaÐenvironmental and economicÐ
109.19
27 734

11.92
175.4
652.5

which are again divided into seven sub-criteria.

in all areas; A10, the worst case: no cultivation during dry season; NPV, net present value.
213
A4

5.3

The environmental criterion is divided into four

sub-criteria, and economic sustainability criteria
1051.09

into three sub-criteria as de®ned in step one. The

682.57
645.63
33 775

5.98
205

seven alternatives designed for dry season crop-

A3

6.1

ping are included, and each of the alternatives is

Pay-o€ matrix: sustainability criteria versus alternative cropping patternsa

linked to each sub-criterion.

417.71
516.92
1056.4
34 765

12.56
252
A2

5.5

5.5. Development of pay-o€ matrix

Alternatives

ÿ206.28
66.849
27 190

All the elements of the pay-o€ matrix (criteria

21.47

705.3
271
A1

4.8

versus alternatives) are shown in Table 1 The

selection criterion as outlined in step one is either
maximization (of bene®ts) or minimization (of
MCUM
MBaht
MBaht
MBaht
MBaht
Ratio
Units

costs).
Ha

5.6. Assigning weights to each criterion

Maximize
Maximize

Maximize
Maximize
Maximize
Minimize
Minimize
Objective

In any MCDM analysis, the relative weight of

particular criterion plays an important role. The
weight is assigned according to the relative
Energy output/input
Water requirements

importance of the criterion included for analysis.

Environmental cost

Government NPV

Zeleny (1982) describes two kinds of methods for

Land suitability

Farmers' NPV

Societal NPV

assigning weights. The ®rst is the subjective

weight, which is a relatively stable concept of a
Criteria
Table 1

priori criteria importance re¯ecting an individ-

a

ual's cultural, genetic, psychcological, social and

 D.N. Tiwari et al. / Agricultural Systems 60 (1999) 99±112 107

Fig. 2. Hierarchy of sustainability criteria.

environmental background. The second is the
objective weight which is a relatively unstable,
context development concept of informational
importance based on a particular set of objectives
and a given decision situation. As Zeleny (1982)
further pointed out, these weights are sensitive to
the changes in both the feasible set of alternatives
and criteria, and thus to ¯uctuations in average
information generated by both. This indicates that
weights are to be assigned according to the context
of the problem. Although decision makers' pre-
ference over each criterion compared to another
would give a better picture of the weight, they can
be judged by assigning di€erential weights from
both the government and farmers' viewpoints.
In the case of the CP, ®rst, equal weights
are assigned to all criteria. Then weights are
assigned giving priority to the economic, soci-
etal and environmental criteria at a time. The
vector of weights assigned in each case is shown in
Table 2.
5.7. Development of questionnaires for decision
makers and local people
In the case of the multi-layer analysis, the
quantitative weights are derived from qualitative
statements on the relative importance of the cri-
teria obtained from comparisons of criteria by the
respondents. Saaty (1980) proposed a nine-point
scale to express di€erences in their relative impor-
tance. The decision maker is asked to compare
all pairs of criteria in a nine-point scale, and a
pairwise comparison matrix is then developed
108 D.N. Tiwari et al. / Agricultural Systems 60 (1999) 99±112

Table 2
Vectors of maximum or best criterion values, minimum or worst values and four sets of criterion weightsa

Criteria f i f 
i Criterion weight sets

w1 w2 w3 w4

Land suitability 34 765 0 0.1250 0.0909 0.2000 0.0769

Energy output/input 6.1 0 0.1250 0.0909 0.2000 0.0769
Water requirements 108 0 0.1250 0.2727 0.2000 0.0769
Environmental cost 5.98 28.68 0.1250 0.0909 0.2000 0.0769
Farmers' NPV 684.88 ÿ665.9 0.1250 0.0909 0.0667 0.2308
Government NPV 1175.92 ÿ410 0.1250 0.0909 0.0667 0.2308
Societal NPV 682.57 ÿ280.8 0.1250 0.2727 0.0667 0.2308
a
w1, Equal weights to all sustainability criteria; w2, high priority to water savings and societal NPV; w3, high priority to environ-
mental criteria; w4, high priority to economic sustainability criteria; NVP, net present value.

according to the results. The ®rst step in deter-
mining weights is to design a set of questions for
interview with the local farmers' and the project
ocials. A set of questionnaires was designed to
know the farmers' and irrigation department o-
cials' judgements on pairwise comparisons of sus-
tainability criteria and sub-criteria.
5.8. Administering the questionnaires
5.8.1. Interview with farmer leaders
Eighteen farmer leaders were selected for inter-
view from di€erent zones from the head, middle
and tail regions of the system on a random basis.
They were told about the objectives of the ques-
tionnaires, sustainability criteria and sub-criteria
and on how they can participate in the decision-
making processes for cropping pattern selection
during the dry season. They were ®rst explained in
group, and interview was taken on individual basis
after they were more or less clear of the purpose
of the interview. Farmers' answers were again
rechecked by asking what they meant by a parti-
cular answer and were found satisfactory for
inclusion in the analysis.
5.8.2. Interview with project ocials
Sixteen government ocials at di€erent levels of
hierarchy from the Regional Irrigation Depart-
ment and the Project Oce were asked to express
their concerns on the ranking of di€erent sustain-
ability criteria and sub-criteria.
5.9. Computation of consistency index
The absolute ranking values for each pair com-
parison obtained from the survey was fed to the
Expert Choice (EC) package for determining the
local and global priority weights. First, the rank-
ings provided by the local people and project o-
cials for each pairwaise comparison were entered
into the speci®ed format for analysis. Second, the
level of consistency was measured by computing
the consistency index in each case. The composite
weights can be obtained by taking a geometric
mean of the values for each respondent. The value
of each alternative under di€erent sub-criteria
were then entered and the synthesis report was
derived in each case. The results are presented in
the next section.
6. Results and analysis
6.1. Decision making using CP
To solve the multi-criterion problem using
CP, the ®rst task is to calculate the vectors of the
ideal point valuesÐthe best and the worst values.
The ®rst two columns in Table 2 show the esti-
mated values for each criterion. Table 2 also
shows the relative weights assigned to each criter-
ion assuming that it represents the decision
makers' preference among several criteria at a
time.
 D.N. Tiwari et al. / Agricultural Systems 60 (1999) 99±112
6.1.1. Compromising solution based on equal
weights for all criteria
The results obtained in the case of equal weights
assigned to all criteria showed that alternative A3
is the most preferred alternative management plan
among the 10 alternatives for all values of p.
Conversely, the worst case scenario A10 is found
to be the least preferred alternative for all values
of p.
6.1.2. Compromising solution with more priority to
water saving and societal NPV
In this case, the solution is more heterogeneous
and unstable. Alternative A5 was found to be the
best preferred alternative when p=1 and p=1.
Alternative A10 appeared highly favoured at p=6
and p=10.
6.1.3. Compromising solution with more priority to
all environmental sustainability criteria
In this case, A3 and A6 were found to be the
best preferred alternatives at p=1 and 2, and p=6
and A10, respectively. At p=1, alternative A8
was found to be the best alternative.
6.1.4. Compromising solution with higher priorities
to all economic sustainability criteria
In this case, a more stable solution was obtained
and alternative A3 was the best preferred alter-
native except for p=1. For p=1, A5 was found
the best alternative.
6.2. Incorporating local peoples perception: AHP
analysis
6.2.1. Local people's observations
During the ®eld survey, farmers were also asked
to give their reasoning for the particular choice of
pairwise comparisons of di€erent sustainability
criteria and sub-criteria. From the analysis it was
found that their preferences were supported by
their long farming experiences which are summed
up as follows:
1. Cropping patterns designed and adopted
according to land suitability conditions are
more important to them as they will help
save both water and energy inputs.
109
2. Savings in energy input (agrochemical and
farm power) is more important than water
savings. If they wanted to save water their
farm will need more pesticide in order to kill
excess weeds that would grow due to less
availability of water. The cost of pesticide
applications in such a case will be more than
what could be gained by saving the irrigation
water.
3. Farmers' demand for water is also con-
strained by the available suitable land, and
pricing of water, if implemented, will play
only a partial role in in¯uencing demand.
Farmers' choice for a particular criterion
depends upon the type of land they already
own and cultivate.
4. For some farmers, land suitability and water
savings are equally important as they think
that by scan also be achieved.
5. Compared to large size landholders, small
size landholders showed more care about
societal and government NPV. Their view-
point was that rich people can a€ord to pay
for environmental cost, but poor people
cannot a€ord such losses and also cannot
pay for it. If the farmers were charged for
irrigation water and for excessive use of
agrochemicals on a proportional basis, poor
people will get bene®t from the government.
This expression also provides a concept of
compensation from social pricing mechanism
through internalization of external costs.
6. Some farmers told that a question regard-
ing saving irrigation water should not be
brought, as they were not receiving irrigation
water.
6.2.2. Testing inconsistency index and determ-
ination of local and global priority weights
In the case of farmers, the three sets interviewed
were discarded, because of a high inconsistency
ratio. In four cases, although the consistency ratio
was found slightly higher than 0.1, they were
found within consistency limits when synthesized
with respect to the goal. The composite weights
were obtained by taking geometric means of each
value obtained from each of the respondents. The
overall inconsistency index was found higher in
110 D.N. Tiwari et al. / Agricultural Systems 60 (1999) 99±112
the case of government respondents. In both cases
of farmers' and government ocials rankings,
highest priority was given to land suitability sub-
criteria followed by water savings and NPV esti-
mated from farmers' viewpoints. The priority for
other criteria varied in both cases. The details are
given in Figs. 3 and 4.
6.2.3. Analysis of the results
The results indicated high importance to the
environmental sustainability criteria compared to
the economic sustainability in both cases of pair-
wise rankings by farmers and ocials. Among
the environmental sub-criteria, both the local and
global priority weights were higher in the case of
land suitability compared to other sub-criteria.
Likewise, in the case of economic sub-criteria,
farmers' viewpoints received highest global and
local priority weights compared to governments or
societal sub-criteria.
Fig. 3. Analytical hierarchical process priorities for sustain-
ability criteria (farmers' viewpoint).
Fig. 4. Analytical hierarchical process priorities for sustainability criteria (ocials' viewpoint).
Figs. 5 and 6 show the synthesis of results for
each of the alternatives designed from farmers'
and project ocials viewpoints. The overall
inconsistency index was improved in both cases.
The results indicated that alternative A5 was the
best alternative from the farmers' viewpoint, and
alternative A2 and A3 were the best one from
project ocials' viewpoints.
In both cases, environmental sustainability rec-
eived almost double priority compared to eco-
nomic sustainability. While in the farmer's case, it
was obtained as 0.673 and 0.327, in the govern-
ment ocial's case it was obtained as 0.712 and
0.288. The results indicated that compared to
farmers, government ocials showed more con-
cern for environmental criteria. Likewise, among
Fig. 5. Analytical hierarchical process priorities for alternatives
(farmers' viewpoint). A3, priority for upland crops in highly
and moderately suitable areas; A2, priority for rice cultivation
in highly and moderately suitable areas; A5, area allocation
according to farmers' preferences; A7, rice cultivation in all
areas; A4, transfer of low-resource areas for other uses; A1,
continuation of present cropping practices; A6, reduction in
water supply based on distance from the main canal.
 D.N. Tiwari et al. / Agricultural Systems 60 (1999) 99±112
Fig. 6. Analytical hierarchical process priorities for alternatives
(ocials' viewpoint). A5, area allocation according to farmers'
preferences; A3, priority for upland crops in highly and mod-
erately suitable areas; A2, priority for rice cultivation in highly
and moderately suitable areas; A7, rice cultivation in all areas;
A4, transfer of low-resource areas for other uses; A1, con-
tinuation of present cropping practices; A6, reduction in water
supply based on distance from the main canal.
the environmental sub-criteria, the land suitability
sub-criterion was given the highest priority by
government ocials. The government NPV and
societal NPV received lowest priority from the
farmers and the government ocials, respectively.
6.3. Comparison of results obtained from CP and
AHP
CP basically derives solutions with the best
trade-o€ among the criteria with di€erent weights
assigned to each criterion. As seen from the above
results, a more or less stable solution was found
for the ®rst best alternative A5. This shows that if
water resource scarcity and environmental aspects
are considered, cultivation of non-rice crops will
generate a better output than rice cultivation in
the dry season.
In other cases, however, the result signi®cantly
varied. The alternative A10 was found to be the
best one for p=6 and 10 when more weight was
assigned to the water saving and societal NPV.
Both criteria favored water saving and charging
irrigation water on scarcity rent basis. In this case,
it was assumed that farmers might be willing to
sell their share of water at a price equal to their
willingness to pay rather than cultivating rice
during the dry season. Likewise, when more
priority was given to environmental sustainability
criteria, alternative A6 was found to be the ®rst
111
best alternative at p=6 and 10. This was mainly
due to reduction in water based on the distance
from the main canal.
In the case of AHP priority setting, while alter-
native A3 was found the most preferred by farm-
ers, alternative A5 was found to be the optimal
when viewed from project ocials' perspectives.
In the latter case, the result was the same as
obtained from the CP. However, the result varied
in other cases. This shows that CP based on expert
judgement may provide a di€erent outcome com-
pared to the decision analysis with incorporation
of local people's preferences. This further indicates
that incorporation of local people's opinion is
quite important in the environmental±economic
decision-making process and should be considered
at di€erent levels of the decision hierarchy.
7. Conclusions: implications for research and policy
The environmental±economic decision-making
situation involves a complex decision-making
process and usually requires a more comprehen-
sive framework to arrive at the optimal solution.
This paper provides a comprehensive analytical
framework for incorporating sustainability con-
cerns into the environmental±economic decision-
making process using multi-criteria evaluation
techniques. Use of the GIS technique facilitated
spatial analysis and design of alternatives based on
the land suitability criteria and ecological bu€er
zoning concepts. In addition, this paper also
incorporated farmers' perceptions as well as their
preferences into the decision-making process using
a two-stage ®eld survey. These aspects can be
considered as a major step forward in environ-
mental±economic decision making at the project
level in the context of developing countries.
Water scarcity has been a national problem in
Thailand. In this context, e€orts on promoting
non-rice crops have been considered as the best
way towards solving this crisis and achieving the
objective of sustainable intensi®cation of agricult-
ure in lowland irrigated areas. Both the growing
water resource scarcity and environmental costs
of excessive use of agrochemicals indicate that
the project evaluation criteria should be shifted
112 D.N. Tiwari et al. / Agricultural Systems 60 (1999) 99±112
towards evaluating these costs and incorporation
of these concerns into the decision-making pro-
cess.
The results obtained using MCDM techniques
provided useful guidance for selecting optimum
cropping patterns taking into consideration the
economic and environmental sustainability criteria
and local people's perceptions. Unlike traditional
emphasis on rice cultivation as a means of enhan-
cing incremental bene®ts from irrigated agri-
culture during the dry season, the result of the
study showed that making a shift to non-rice crops
will result in more pro®t to farmers and less bur-
den to society which can be considered a pre-
requisite for making the transition towards sus-
tainable agriculture. But achieving the goal of
sustainable intensi®cation of agriculture requires
various incentive mechanisms as considered while
carrying out multi-criteria evaluation; these
include: (1) pricing of irrigation water or charging
it at various levels according to the ®eld condi-
tions; (2) minimizing existing and potential envir-
onmental costs by taxing agrochemicals; and (3)
facilitating transfer of water rights to allow farmers
for making right decisions, especially during the
water scarcity period. Design and implementation
of these market-based measures will no doubt
require institutional re-arrangements and further
considerations of political economy factors for
successful implementation of these mechanisms.
References
Alphonce, C.B., 1997. Application of the analytic hierarchy
process in agriculture in developing countries. Agricultural
Systems 53, 97±112.
Barbier, E.B., Pearce, D.W., Markandaya, A., 1989. Envir-
onmental Sustainability and Cost-bene®t Analysis, Environ-
mental Planning and Management A, Vol. 22 (pp. 1259±
1266).
Bojo, J., Maler, K., Unemo, L., 1992. Environment and
Development: an Economic Approach. Kluwer Academic,
Amsterdam.
FAO, 1991. FAO denBotsch Conference Report, Food and
Agriculture Organisation of the United Nations, Rome.
Golden, B.L., Wasil, E.A., Levy, D.E., 1989. Applications of
the analytical hierarchy process: a categorised annoted bibi-
liography. In: Golden, B.L., Wasil, E.A., Harker, P.T.
(Eds.), The Analytic Hierarchial Process: Application and
Studies. Springer, New York, pp. 37±58.
Hafkamp, W., Nijkamp, P., 1968. Integrated economic±envir-
onmental±energy policy and con¯ict analysis. Journal of
Policy Modelling 8, 551±576.
Hippel, K.H., 1992. Multiple objective decision making in
water resources. Water Resources Bulletin 28, 3±10.
Janssen, R., 1991. Multi-objective decision support for envir-
onmental problems. Free University, Amsterdam.
Laxminarayanan, P.G., Johnson, S.R., Bouzaher, A., 1995. A
multi-objective approach to integrating agriculture and
environmental policies. Journal of Environmental Manage-
ment 45, 365±378.
Munasinghe, M., 1992. Towards Sustainable Development:
The Role of Environmental Economics and Valuation (The
World Bank Environment Paper Number 3). The World
Bank, Washington, DC.
OECD, 1995. Sustainable Agriculture: Concepts, Issues and
Policies in OECD Countries. Organisation of Economic C0-
operation and Development, Paris.
Pearce, D.W., 1994. Valuing the environment: past practice,
future prospects in valuing the environment. In: Serageldin, I.,
Steer, A. (Eds.), Environmentally Sustainable Development
Proceedings Series No. 2. The World Bank, Washington,
DC.
Saaty, T.L., 1980. The Analytical Hierarchy Processes.
McGraw Hill, New York.
Saaty, T.L., 1993. Transport planning with multiple criteria:
the analytic hierarchial process applications and progress
review. Journal of Advanced Transportation 29, 81±126.
Schoner, B., Wedley, W.C., 1989. Ambiguous criteria weights
in AHP: consequences and solutions. Decision Sciences 20,
462±475.
Tiwari, D.N., 1998. Determining Economic Value of Irrigation
Water: Comparision of Willingness to Pay and Indirect
Valuation Approaches as a Measure of Sustainable Resource
Use (CSERGE Working Paper GEC 98-05). University
College, London.
Tiwari, D.N., 1996. Sustainability criteria and cost-bene®t
analysis at the project level. In: Proceedings of International
Conference on Integrating EIA and Cost-bene®t Analysis.
University of Bradford, Bradford, UK.
Zekri, S., Romero, C., 1993. Public and private compromises in
agricultural water management. Journal of Environmental
Management 37, 281±290.
Zeleny, M., 1982. Multiple Criteria Decision Making. McGraw-
Hill, New York.
El Serafy, 1991.
Morgenstem, 1998.