Country Water Actions

Country water actions are stories that showcase water reforms undertaken by individuals, communities, organizations, and governments in Asia-Pacific countries and elsewhere.

People's Republic of China: A promising path toward poverty-free countryside
July 2005

REDUCING POVERTY THROUGH ECONOMIC REFORMS The People's Republic of China (PRC) has made remarkable progress in reducing rural poverty. From 1978 to 2000, more than 200 million rural poor were lifted out of poverty. Plus, the incidence of rural poverty dropped dramatically from 30.7% to 3.4%. Broad-based economic reforms made this possible, shifting the country from being centrally planned to a more market-oriented economy. GDP quadrupled after 1978. Reforms in the booming agricultural sector became the cornerstone of reforms throughout the economy. On the ground where policies are implemented, PRC's small- and large-scale farmers have almost equal access to water. Indeed, water is sometimes allocated to favor the poor. A combination of other factors have also led to an increase in off-farm employment. What role did irrigation play in PRC's agriculture boom? PRC'S PRO-POOR IRRIGATION STUDIED

THE STUDY'S PICTURE OF POVERTY AND IRRIGATION IN PRC

Poverty rates in the irrigation districts (IDs) studied were double the 3.4% national average. But importantly, farmer poverty within each ID was not related to the location or size because land was equitably distributed. Lower incomes were associated with larger families and lower education levels. Any policy changes that boost agricultural incomes-by increasing the area irrigated or improving irrigation efficiency-will increase poor farmers' incomes relatively more than those of rich farmers. Poorer households rely much more on agriculture than wealthier ones. The poorest groups earn 87% of their income from crops and livestock; the richest groups earned only 46%. Even greater, poor men and women gain 86-173% higher net incomes from irrigated crops than from rain-fed crops. In general, the smallest and the largest farms had equal access to water. Plus, in all four systems studied, the poorest farmers had the greatest access to water in terms of per capita and per household use. Seventy-five percent of farmers said their water supply was reliable. Plus, where farmers had no problem accessing water when they needed it, they obtained higher crop yields. IMPACT OF PRO-POOR IRRIGATION

A newly released study, "Pro-poor Intervention Strategies in Irrigated Agriculture in Asia," illustrates the poverty transforming power of PRC's pro-poor agricultural strategies. The heart of PRC's strategy is putting the poor first, without disadvantaging the rest. The study, funded by the Asian Development Bank, used a holistic approach to understand rural poverty and identify practical, pro-poor interventions. The International Water Management Institute (IWMI) carried out in-depth, multidisciplinary studies in five other Asian countries. IWMI and the Center for Chinese Agricultural Policy in Beijing collaborated for the research project to critically assess irrigation system performance, poverty, and relevant institutions. In-depth studies were made of four large-scale irrigation systems in two provinces, including interviews with 231 households in 2001-2002. This, coupled with a national survey of 1,199 households in six provinces, helped pinpoint policy actions that could make the country's irrigation systems more efficient and more pro-poor.

Compared with other countries in Asia, a high proportion (52%) of PRC's cultivated land is irrigated. Most low-value staple crops are not irrigated. The pro-poor aspects of irrigation in PRC, according to the survey, are For almost all crops, irrigated plots yield more than rainfed ones. Access to irrigation also increases the annual output of land, as farmers can grow two crops per year. Irrigation allows the rural poor to grow more highvalue crops, yielding much higher revenues than nonirrigated plots-79% higher overall.

Poorer farmers benefit more than richer ones: irrigation increases revenues by 93% in poor areas, and 89% in richer areas. Irrigation boosts incomes by 38% in poor areas and only by 9% in rich areas because cropping revenues comprise 40% of total incomes in poor areas and only 10% in rich ones. Raising the incomes of poor men and women by this amount-through irrigationwould lift the vast majority of them above the poverty line. THE "HOUSEHOLD RESPONSIBILITY" SYSTEM THE "household responsibility" system is credited as the main motivator behind the agricultural sector. Households were given lengthy leases on collective land, formerly held by communes. Households could then decide what to grow and whether to keep their produce or sell it for profit. Equitable redistribution of land, based on family size, boosted productivity and agricultural performance. Rural incomes jumped from 220 yuan per year in 1978 to 964 yuan per year in 1997. Land distribution, however, was based on land quantity, quality and location-leading to very small holdings per family, often less than half a hectare in total and scattered over five or six plots. INVESTMENT EFFECTS

To address this, PRC's policymakers have promoted water management reforms since the early 1980s. Participatory irrigation management, through farmer water user associations (WUAs), has been developed as a key to improving irrigation management. Now, water supply corporations (WSCs) operate and maintain reservoirs and branch canals. The corporations sell water to the user associations on demand, at prices designed to recover capital and operating costs. Water is charged according to a measured volume, which encourages WUA farmers to be less wasteful. WUAs collect water charges from their members, and are legally responsible for maintenance and water delivery at the farm level. Around 250 user associations and 17 supply corporations have been established in eight provinces. MORE REFORMS TO PUSH PROGRESS To continue creating a picture of progress, the study suggests that PRC's reformers consider the potential in higher water pricing, further management reform through incentives. Despite price hikes in some irrigated districts, PRC's agricultural water is still believed to be under-priced. Charges vary among systems and, at the farm level, are usually based on the area irrigated. To PRC's credit, though, the charging system is fairly decentralized. Local government bodies set fees based on provincial and central government guidelines. The study finds that PRC's management reforms are steering the countryside in the right direction-toward progress. The transfer of management from the village collective to farmers and contractors over the past 5 years has been key. But water management reform still varies across the four sample IDs. In some IDs, the new water managers are still strongly linked to the village leadership. So, in reality, the new systems differ little from collective management. The study showed that, given financial incentives, managers will try to improve water management, significantly reducing the amount of water delivered to farmers. Very importantly, results showed that using such incentives will not negatively affect farmers' output, farm income or poverty. Incentives, however, are used in only 41% of villages in the sample IDs. RELATED LINKS Pro-Poor Interventions in Irrigated Agriculture: PRC Experience [PDF] Pro-poor Intervention Strategies in Irrigated Agriculture in Asia

Investments in rural infrastructure, including irrigation, also contributed significantly to growth and poverty alleviation. The proportion of cultivated area under irrigation increased from 18% in 1952 to more than 50% by the late 1990s. Investment has been greater in the lower reaches of systems than in the upper reaches by 30% upstream and 70% downstream. The result is a more reliable water supply, and equitable access to water within systems. This, coupled with equitable land distribution, explains why the gross and net values of crops produced per unit of land are generally similar among the head, middle, and tail reaches of systems. Opportunities for irrigating new areas are limited, however, because irrigation systems have already been developed in most suitable areas. PERSISTENT PROBLEMS: WATER SHORTAGE Despite the posted progress in the countryside, PRC faces issues with water shortages. Demand from rapidly growing industry and expanding urban populations threaten the amount of water available for agriculture, which will likely affect food production. The country has limited water resources per capita, and exploiting new resources is often prohibitively expensive. Yet current resources, such as surface water and related systems, suffer setbacks. Surface-water irrigation systems are falling into disrepair, and because farmers have no incentive to use water carefully, agricultural water is often misused. Only around 40% of the surface water allocated to agriculture is used efficiently for crop production.
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*This article was first published online at ADB's Water for All website in July 2005: http://www.adb.org/water/actions/PRC/poverty-free-countryside.asp. The Country Water Action series was developed to showcase reforms and good practices in the water sector undertaken by ADB’s member countries. It offers a mix of experience and insights from projects funded by ADB and those undertaken directly by civil society, local governments, the private sector, media, and the academe. The Country Water Actions are regularly featured in ADB’s Water for All News, which covers water sector developments in the Asia and Pacific region.

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