Boosting Drought Mitigation Option Feasibility in Indonesia

Cinthya Indradewi Dadimesa1and Yulius P. K. Suni2

1
Student of Civil Engineering dept. of Catholic University of Widya Mandira
2
Lecturer of Civil Engineering dept. of Catholic University of Widya Mandira
Email: sunyulius@gmail.com

ABSTRACT
One of the government's options in mitigating drought for rice fields in Nusa Tenggara Timur
(NTT) province is the installation of Ground Water Irrigation Network (JIAT) with water sourced
from drilling wells. The big question is whether the investment for drilling wells and irrigation
networks is equivalent to the financial benefits derived from those investments. This study
examines the mitigation options with cost and benefit analysis method. The study location is
Kuanheun Village, Amabi Oefeto sub district, Kupang district, NTT province. The cost and
benefit analysis using the calculation of NPV, IRR, and BCR. In this study, calculations of
optimum irrigation alternatives are also made.

The result of the analysis and calculation shows that the current cropping pattern either two
planting times or three is not financially profitable. Therefore, it is necessary to design a
potentially profitable irrigation alternative. The optimum irrigation alternative chosen is the
selection of plant species and the watering pattern according to the needs of each plant growth
phase.

The first alternative, planting pattern is Rice - Rice – Corn. This alternative simulation shows the
potential for financial benefits (BCR = 1.95). While the second alternative, Rice - Rice – Peanut.
The second alternative has higher financial profit potential (BCR = 2.29). This is because one
type of plant chosen (peanut) has a higher market price.

Key word: Drought Mitigation, Cost and Benefit Analysis, Optimum Irrigation Alternative

Background
Climate in Nusa Tenggara Timur (NTT) province is categorized in dry and wet seasons. In
general dry season lasts for between eight to nine months of the year[ CITATION BPS11 \l
1033 ]. Wet season period is three to four months but currently rainfall patterns during wet
season become erratic in terms of volume and frequency. These conditions make the area known
as a drought prone area.

World Food Programme[ CITATION WFP15 \n \t \l 1033 ] World Food Program (2015)
reports that almost all districts in NTT are at risk of decreasing rainfall associated with El Nino
events. Outside of El Nino years, NTT often experiences long droughts and recurrent drought. It
was reported that during the period 1999 to 2014, the province experienced a loss of rice
production of 30,000 tons per year due to drought.
The unpredictable rainfall patterns contribute to a decrease of agriculture contribution to gross
regional domestic product (GRDP) of NTT, from about 70% in the late 1960s to 39% in 2009
[ CITATION Las11 \l 1033 ]. A survey in 2007 indicated that 91.4% households in West Timor
had food insecurity situation [ CITATION Kie07 \l 1033 ]. The main factor contributing to food
insecurity was protracted drought [ CITATION Mus09 \l 1033 ] since farming in NTT is rainfed
agriculture which heavily relies on rainfall and traditional farming practice.

In response to this condition, the government applies a supply augmentation option by

constructing new water resource infrastructures. One of the options is the development of deep
ground water drilling wells (hereinafter referred to as drilling) for irrigation puIDRoses of paddy
fields including the Groundwater Irrigation Network (JIAT). Drilling in NTT particularly
Kabupaten Kupang began in 1980 [CITATION SIS16 \l 1033 ]. Drilling is held at least 1 unit /
year and maximum 38 units / year in Kupang District [CITATION SIS16 \l 1033 ].

One of the ecological impacts of excessive groundwater extraction (drilling) is the decrease in
the face of the soil. Some of the areas, for example, Calofornia experience a land subsidence of
8.5 m [CITATION Wil17 \l 1033 ] and in Spain a land subsidence of 0.4 m / year [CITATION
Res17 \l 1033 ]. Whereas in Indonesia, for example in Jakarta, it was noted that land subsidence
occurred 5-12 cm/year, especially in the North Jakarta area [ CITATION Lip17 \l 1033 ] while in
Semarang it was 2-10cm/year and a maximum of around 16 cm / year [ CITATION Muh07 \l
1033 ] due to excessive drilling extraction.

In addition to the ecological adverse effects, the big question is whether investment for the
construction of bore wells and irrigation networks is equivalent to the financial benefits obtained
from these investments. One of the wells and JIAT project in Kuanheun village is IDR.
1,362,731,000.00. The driling and scheme have a 4.46 liter / second discharge. The need for
irrigation water for rice fields in dry areas such as Timor is 1.2 liters / sec / ha. This indicates that
the scheme's service is 3.7 ha of rice fields. With the productivity of rice fields in NTT according
to BPS [CITATION BPS2015 \n \t \l 1033 ] is 3.56 tons per ha and the selling price of dry mill
grain of IDR 4,000,000.00 per ton, the financial value of the paddy field is IDR. 52,940,200.00.
This figure indicates an imbalance between investments and benefits. This means it takes 26
times the harvest season to achieve its investment value.

Method of Implementation
The purpose of this study was to identify the cost and benefit ratios of the wellbore project and
JIAT with project value (capital), and O & M (Operation and Maintenance) on functional land
area. Next formulate alternative irrigation mechanisms that have optimum benefits.
To achieve the above research objectives, the steps (with adaptation of Graaff & Kessler, 2010)
conducted include:
Data collection. Data collection is a method used to obtain data in order to carry out research.
Data is divided into 2 (two), namely primary data and secondary data. Primary data was directly
obtained at the Kuanheun village research location and secondary data was gathered from books,
journals and related government institutions namely Air Tanah dan Air Baku Nusa Tenggara II
Provinsi Nusa Tenggara Timur and BMKG Lasiana Kupang.

After the data were obtained, next step was determination of the irrigation impact assessment by
calculating directly at the benefits of the infrastructure at the study site. As shown in (Figure 1),
the benefit of on-site infrastructure is for agriculture only. Furthermore, this research will focus
on farmers as beneficiaries of irrigation water.

Identification of costs and benefits (effects). After assessment of irrigation impact, next step was
identification of costs and benefits (effects). Identification of costs covered project value (cost
estimation of drilling and irrigation schemes), operation and maintenance costs. For benefits
identification, calcultation included harvest area of paddy field (ha), land productivity (ton/ha),
and selling price of dry mill grain (IDR/ton).

Quantification of costs and benefits. Next step was quantification of costs and benefits.
Quantification is a constant value of the costs and benefits to be calculated for the initial cost and
benefit analysis.

Determination of an appropriate time horizon. After the quantification of costs and benefits has
been completed, it as followed by determining time scale. For this project, time span is 25 years
started from 2012.

Discount factor (DF). Determination of DF, preceded by calculating the value of Discount Rate
(DR) using the interest rate in 2012 which was 10% (Bank Mandiri).

The Discount Factor (DF) for year t at an interest rate i equals:

1
DF n=
(1+i)n

Source:[ CITATION Bam01 \l 1033 ]

Where:

DF = Discount Factor (%)

i = interest rate (%)
n = year

Calculation of PV, NPV, IRR, and BCR. Next step was calculation of Present value (PV), Net
Present Value (NPV), the Internal Rate of Return (IRR), and Benefit Cost Ratio (BCR).
Present value (PV) is how much is the current value of money for a certain value in the
future[CITATION Nur14 \l 1033 ].

Basic formula for present value:

FV
PV =
(1+i )n

Source:[CITATION Via14 \l 1033 ]

Where:
PV = Present Value (IDR)
FV = Future Value (IDR)
i = interest rate (%)
n = period concerned (year)

NPV gives the difference between the present value of the stream of benefits and the present
value of the costs incurred. A project can only be accepted if this difference (the NPV) is zeroor
positive and the project with highest difference (NPV) or suIDRlus should be chosen in case of
mutually exclusive alternatives. Mutually exclusive means that they require at the same time, and
in the same area scare resources available (other than capital) and thus cannot both be executed
[ CITATION Jde \l 1033 ].

NPV equals:

n
Bt −C t
NPV =∑
t =1 ( 1+i )t

Source:[ CITATION Bam01 \l 1033 ]

Where:

NPV = Net Present Value (IDR)

Bt = Discounted benefits at year t (IDR)
Ct = Discounted costs at year t (IDR)
n = Project period (year)
i = Interest rate (%)
t = year

The Internal Rate of Return (IRR) provides that particular discount rate, that when used in the
discounting of benefits and costs, give an equal present value for the benefits and for the costs, or
the NPV is zero. That discount rate is called the internal rate of return and represents the average
earning power of the money used in the project over the project life. It is the maximum interest
rate that a project could pay fir the resources used if the project is to recover its investment and
operating costs and still break even. This discount rate can be compared with the opportunity
cost of capital in the country, as well as with the borrowing rate for financing the project
[ CITATION Jde \l 1033 ].
IRR can be compared with Social Opportunity Cost of Capital (SOCC), a cost paid by
community. SOCC is usually used as discount factor[CITATION EVA17 \l 1033 ].
If IRR > SOCC, the project is feasible
If IRR = SOCC, the project on BEP stage
If IRR < SOCC, the project is not feasible.

Formula for IRR:

NPV ' −NPV } left (i−i'

NPV '
IRR=i' + ¿
¿

Source:[ CITATION Bam01 \l 1033 ]

Where:
'
i = discount rate for NPV '
i = discount rate for NPV

Benefit Cost Ratio (BCR). Benefits and costs ratio (BCR) is used to justify whether a project is
financially suitable or not suitable. BCR is derived from a ratio with the present value of all
benefits in the numerator and the present value of the costs in the denominator [ CITATION
Jde \l 1033 ]. All projects with a BCR equal or greater than 1 can be considered financially
sound. The project with the highest BCR will be normally preferred, although there are many
exceptions to the rule.

Formula for BCR:

Benefit
BCR= >1
Cost

Source:[CITATION Nur \l 1033 ]

Where:
BCR > 1 ; investment will be financially sound
BCR < 1 ; investment will not be financially sound
BCR = 1 ; investment on break even stage

Setting optimum irrigation alternatives

After the calculation of BCR is obtained, proceed with the determination of the alternative
irrigation mechanism that gives the optimum B / C ratio. The variables to be considered are the
provision of water according to the real needs of the plant, the area of planting, the time of
planting to harvest, and the type of plant. In calculating the irrigation water demand analysis, this
study uses CROPWAT Version 8.0 software. The first scenario in the alternative is by utilizing
rain water and pumps for cropping pattern Paddy - Rice - Maize (for 1 year). And the second
scenario is the provision of rain water and pumps with the cropping pattern of Rice - Rice -
Peanut (for 1 year). After determining the optimum irrigation alternatives, then proceed with
calculating the BCR of each alternative.

Drought Mitigation concept

Drought is a prolonged period of abnormal low rainfall leading to a shortage of water for
fulfilling the needs for the necessities of life, agriculture, economic and environmental activities.
In general, drought can be classified as natural and / or human-induced drought, as follows:

 Natural drought
 Meteorological drought relates to abnormal low rainfall in one season. Meteorological
drought measurement is the first indication of drought (Wilhite and Glantz 1985 cited by
NDMC).

 Hydrological drought relates to the shortage of surface water and groundwater supply.
This drought is measured based on river water levels, reservoirs, lakes and groundwater
table. There is a period from decreasing rainfall to decreasing river water level, reservoir,
lake and ground water level. Hydrological drought is not an early indication of drought
(Wilhite and Glantz 1985 cited by NDMC).

 Agriculture drought is associated with soil a moisture shortage (soil water content) that is
unable to meet the needs of certain crops over a period of time over a large area. This
agricultural drought occurs after meteorological drought symptoms (Wilhite and Glantz
1985 cited by NDMC).

 The socio-economic drought relates to conditions where the supply of economic

commodities is less than the normal requirement due to meteorological, hydrological, and
agricultural drought (Wilhite and Glantz 1985 cited by NDMC).
 Anthropogenic drought
Anthropogenic drought is the pressure on the availability of raw water which is triggered by
human activities, including the increase in water demand, the management of water that is
 not in accordance with the latest demands, irrigation, land use changes, etc [ CITATION
Agh16 \l 1033 ].

Mitigation refers to "efforts to reduce disaster risks by reducing vulnerability and / or enhancing
the capacity to cope with disaster threats"[ CITATION UU07 \l 1033 ]. Drought mitigation
measures can be in the form of drip irrigation combined with mulching; utilization of
groundwater to overcome the dry spell condition; and intercropping applications in farming
[CITATION Sun15 \l 1033 ].

Brief description of study site

Drilling well and Ground Water Irrigation Network (JIAT) are located in Kuanheun village,
Kupang Barat sub district, Kupang district, Nusa Tenggara Timur province. The coordinate point
is 10°14’39.56” S and 123°31’34.83” E.

(a) (b)
Figure 1. Pump house and drilling well (a) and Water Reservoir for JIAT (b)
Administrative data derived from BWS NT II is as follows:

Number : HK.02.03/SNVT/AT&ABNT.II/AT&AB.I/40/I/2017
Date : 17 January 2017
Item of work : Pembangunan Sarana dan Prasarana Irigasi Air Tanah di Pulau Timor dan
Kepulauan (Construction of Groundwater Irrigation Infrastructures in
Timor and islands)
Contract value : IDR. 1.362.731.000,00
Location : Desa Kuanheun, Kecamatan Amabi Oefeto, Kabupaten Kupang
Fund : APBN Rupiah Murni (National Budget Allocation)
DIPA : Satuan Kerja Non Vertikal Tertentu Air Tanah dan Air Baku Nusa Tenggara
II Provinsi Nusa Tenggara Timur
Number : SP DIPA A-033-06.10.400 712/2017
Date : 07 December 2016
Unit code : 400712
Activity code : 5040.006.001.074.A.5341 31
Fiscal year : 2017
Contractor : PT. Gunung Makmur
Jl. Mayjend DI Panjaitan No. 182 Telp. (0352) 481131 Fax (0352) 481131
Ponorego - 63471

Findings
1. General Data

Table 1. General data of drilling well and JIAT Kuanheun

No. Data Remarks

1. Drilling well discharge
2. Cost estimation of project
3. Interview results:
Main puIDRose of construction
of drilling well
Land productivity (paddy)
Dry grain selling price
Seed selling price
Functional area
Type of crop
Operation and maintenance
Water source
4.46 liter/second
IDR. 1.362.731.000,00
a. For paddy cultivation
b. 2 ton/ha
c. IDR. 4.000,00/kg
d. IDR. 10.000,00/kg
e. 8 Ha
f. Paddy
g. Farmers are workers which
are organized in farmers
group, and no additional labor.
There is no operational cost,
since the pump is run by solar
system.
h. Rain fed and drilling well

2. Operational and Maintenance Costs

Based on interview with farmers group in Kuanheun, farmers have two options for cultivation
depending on climate condition. First option, farmers have two planting season in one year. The
farmers plant paddy on the total functional area (8 ha) during wet season and during dry period,
they plant paddy on half of the total functional area. Farmers only use half of the area, since
water source is from drilling well only. For second option, farmers apply three time planting
periods. They plant paddy all the time during the year. Period one, farmers utilize all functional
area, while the other two periods, they cultivate half of the area.
Calculation of total cost for two planting periods is IDR 2,929,166.67 and for three planting
periods is IDR 3,858,333.33. The cost in this term covers cost for seeds purchasing for nursery.
Seed requirement is 25 kg per ha at price of IDR 10,000,- per kg.

Benefit for two planting periods is IDR 93,733,333.33 and three planting periods is IDR
123,466,666.67. Analysis will be made for 25 years of project services.

3. Calculation of NPV, IRR and CBR

The calculation of NPV, BCR, and IRR is summarized in table 2 below.

Table 2. Summary of NPV, BCR and IRR calculation for existing cropping pattern

Cropping pattern Paddy – Paddy (2 periods) Paddy – Paddy – Paddy (3

periods)
Interest rate 10% 10%
Present Value Benefits IDR 784,071,843.27 IDR 1,032,788,800.66
Present Value Costs IDR 36,041,493.31 IDR 47,474,285.60
Initial investment IDR 1,362,731,000.00 IDR 1,362,731,000.00
Net Present Value (NPV) Minus IDR 614.700.650,04 Minus IDR 377,416,484.98
B/C Ratio 0.56 0.72
Internal Rate of Return 6.83% 8.20%
Source: Own compilation

Table 2 shows that two existing cropping patterns have negative NPV, minus IDR
614,700,650.04 and minus IDR 377,416,484.98 for two periods and three periods respectively.
These results clearly show that the project is not financially profitable. Farmers need to modify
their cropping pattern in ways to meet higher crops value and productivity. In order to facilitate
farmers for farming modification and adjustment, agriculture department is call for. Farmers
need also to manage water for irrigation in ways that could cover more farming area. For doing
this, farmers need technical guidance from irrigation department (Public Work) and agriculture
department.

BCRs for two cropping pattern are less than 1. It means the project is not financially sound.
Farmers need technical assistance from the government, Public Work department and Agriculture
department for improving irrigation efficiency and farming practice. This will lead to
improvement of farm productivity which in turn will increase profitability.

IRR is interest rate (i) in which discount benefits equal to discount costs or NPV is zero. A trial
and error calculation found that the interest rates (i) for two periods are 6.83% and for three
periods is 8.20%. These results are less than initial interest rate (10%). It means the project is not
financially profitable. As suggested in the previous paragraph, farmers need technical assistance
from irrigation body and agriculture department for improving farmland cultivation techniques.
Irrigation Efficiency Design
Determination of the irrigation efficiency will combine two variables, namely the provision of
water according to the needs of each plant growth phase and the choice of plant species. The
interviews of farmers found that, potential types of plants that can be developed in the study sites
are rice, corn and peanuts.

The first alternative is the choice of types of rice, rice and corn crops. Calculation of irrigation
water needs using CROPWAT software is shown in table 3.

Table 3. Calculation of irrigation requirement and excess of water from drilling well for
Paddy – Paddy – Maize
Crops Month Period Stage Eff Rain Irr. Req Well Water
excess
(l/s) (l/s) (l/s) (l/s)
Dec 1 Init 0.0024 0.0017 4.46 4.46
Dec 2 Init 0.0035 0.0005 4.46 4.46
Dec 3 Deve 0.0044 0.2716 4.46 4.19
Jan 1 Deve 0.0056 0.0324 4.46 4.43
Jan 2 Deve 0.0066 0.0313 4.46 4.43
Jan 3 Mid 0.0063 0.0369 4.46 4.42
Paddy
Feb 1 Mid 0.006 0.0348 4.46 4.43
Feb 2 Mid 0.0058 0.0358 4.46 4.42
Feb 3 Mid 0.0053 0.0293 4.46 4.43
Mar 1 Late 0.0049 0.04 4.46 4.42
Mar 2 Late 0.0045 0.0407 4.46 4.42
Mar 3 Late 0.0035 0.046 4.46 4.41

Apr 1 Init 0.0023 0.0031 4.46 4.46

Apr 2 Init 0.0014 0.0044 4.46 4.46
Apr 3 Deve 0.0015 0.291 4.46 4.17
May 1 Deve 0.0017 0.0533 4.46 4.41
May 2 Deve 0.0017 0.0548 4.46 4.41
May 3 Mid 0.0015 0.0651 4.46 4.39
Paddy
Jun 1 Mid 0.0013 0.0636 4.46 4.40
Jun 2 Mid 0.0011 0.0661 4.46 4.39
Jun 3 Mid 0.0008 0.0686 4.46 4.39
Jul 1 Late 0.0004 0.0712 4.46 4.39
Jul 2 Late 0.0001 0.0709 4.46 4.39
Jul 3 Late 0.0001 0.0607 4.46 4.40
FALLOW
Maize Sep 1 Init 0.0001 0.0177 4.46 4.44
Sep 2 Init 0.0001 0.0174 4.46 4.44
 Sep 3 Deve 0.0003 0.0322 4.46 4.43
Oct 1 Deve 0.0006 0.059 4.46 4.40
Oct 2 Mid 0.0008 0.0706 4.46 4.39
Oct 3 Mid 0.0008 0.075 4.46 4.39
Nov 1 Late 0.0006 0.0662 4.46 4.39
Nov 2 Late 0.0004 0.0329 4.46 4.43

The calculation in Table 3 above shows that the water supply from the well is sufficient to serve
8 ha of functional area and can even more. The same results can be seen in the second alternative
choice of rice - corn - peanuts. There is an excess of water supply from wells to serve 8 ha of
land. The calculations can be seen in table 4.

Table 4. Calculation of irrigation requirement and excess of water from drilling well for
Paddy – Paddy – Peanut
Crops Mont Perio Growth Eff Irr. Well Water
h d Rain Req excess
stage (l/dtk) (l/dtk) (l/dtk) (l/dtk)
Padi Dec 1 Nurs 0.0024 0.0017 4.46 4.46
Dec 2 Nurs 0.0035 0.0005 4.46 4.46
Dec 3 Nurs/LP 0.0044 0.2716 4.46 4.19
r
Jan 1 Init 0.0056 0.0324 4.46 4.43
Jan 2 Deve 0.0066 0.0313 4.46 4.43
Jan 3 Deve 0.0063 0.0369 4.46 4.42
Feb 1 Mid 0.006 0.0348 4.46 4.43
Feb 2 Mid 0.0058 0.0358 4.46 4.42
Feb 3 Mid 0.0053 0.0293 4.46 4.43
Mar 1 Mid 0.0049 0.04 4.46 4.42
Mar 2 Late 0.0045 0.0407 4.46 4.42
Mar 3 Late 0.0035 0.046 4.46 4.41

Padi Apr 1 Nurs 0.0023 0.0031 4.46 4.46

Apr 2 Nurs 0.0014 0.0044 4.46 4.46
Apr 3 Nurs/LP 0.0015 0.291 4.46 4.17
r
May 1 Init 0.0017 0.0533 4.46 4.41
May 2 Deve 0.0017 0.0548 4.46 4.41
May 3 Deve 0.0015 0.0651 4.46 4.39
Jun 1 Mid 0.0013 0.0636 4.46 4.40
Jun 2 Mid 0.0011 0.0661 4.46 4.39
Jun 3 Mid 0.0008 0.0686 4.46 4.39
 Jul 1 Mid 0.0004 0.0712 4.46 4.39
Jul 2 Late 0.0001 0.0709 4.46 4.39
Jul 3 Late 0.0001 0.0607 4.46 4.40

Kacang Aug 1 Init 0.0001 0.024 4.46 4.44

Tanah
Aug 2 Init 0.0001 0.0242 4.46 4.44
Aug 3 Deve 0.0001 0.0291 4.46 4.43
Sep 1 Deve 0.0001 0.0387 4.46 4.42
Sep 2 Deve 0.0001 0.0512 4.46 4.41
Sep 3 Mid 0.0003 0.0635 4.46 4.40
Oct 1 Mid 0.0006 0.0674 4.46 4.39
Oct 2 Mid 0.0008 0.0668 4.46 4.39
Oct 3 Mid 0.0008 0.0709 4.46 4.39
Nov 1 Mid 0.0006 0.063 4.46 4.40
Nov 2 Late 0.0004 0.0578 4.46 4.40
Nov 3 Late 0.0015 0.0401 4.46 4.42
Dec 1 Late 0.0021 0.0193 4.46 4.44

Benefit and Cost Ratio for these two alternatives is described in the following paragraph.

Calculation of Costs:

 Seeds purchasing for paddy: 25 kg x 8 ha x IDR 10,000 = IDR 2,000,000.-

 Seeds purchasing for maize: 30 kg x 8 ha x IDR 5,000 = IDR 1,200,000.-
 Seeds purchasing for peanuts: 100 kg x 8 ha x IDR 30,000 = IDR 24,000,000.-
Calculation of Benefits:

 Paddy = 8 ha x 2 ton/ha x IDR 4,000,000.00/ton = IDR 113,952,000.00

 Maize = 8 ha x 2.51 ton/ha x IDR 5,000,000.00/ton = IDR 100,320,000.00
 Peanut = 8 ha x 0.87 ton/ha x IDR 30,000,000.00/ton = IDR 208,800,000.00

BCR analysis is summarized in table 5 below.

Table 5. Calculation of NPV, BCR, and IRR for new alternative cropping pattern and
irrigation.

New Cropping pattern Paddy – Paddy – Maize Paddy – Paddy - Peanut

Interest rate
Present Value Benefits
Present Value Costs
Initial Investment
Net Present Value (NPV)
10%
IDR. 2.745.567.532,19
IDR. 43.497.584,48
IDR. 1.362.731.000,00
IDR. 1.339.338.947,71
10%
IDR. 3.625.994.063,74
IDR 234.217.762,57
IDR. 1.362.731.000,00
IDR. 2.056.045.301,17
B/C Ratio 1,95 2,29
Internal Rate of Return 24% 30%
Source: Own compilation

The propose alternative options, planting paddy-paddy- maize and paddy-paddy-peanut, have
higher benefits than the existing cropping pattern applied by farmers. NPV for both options are
positive, IDR 1,339,338,947.71 and IDR 2,056,045,301.17 for option one (paddy-paddy-maize)
and option two (paddy-paddy-peanut) respectively. It is clear that crop type has significant
influence to benefits. As we can see from the table above, peanut has higher value (selling price)
than maize.
Benefits and costs ratios for both options are higher than 1. Option one is 1.95 and 2.29 for the
second option. It means, the project will have financial benefit prospective, especially option
two. Internal Rate of Return (IRR) calculation shows a good result. IRR for option one is 24%
and 30% for option two. The results are higher than bank interest rate (10%). This indicates that
the project will be economically profitable.

Final Remarks
Based on the assessment of drought mitigation offered by the government, it is found that
there is a need for irrigation modernization. Modernization is the provision of irrigation
water according to the needs of each plant growth phase. This will support the expansion
of irrigation service areas as well as potentially bring in greater profits.

Input of irrigation infrastructure to the community (farmers) needs to be supplemented by

capacity building of farmers in terms of irrigation pattern and cropping pattern so that in
turn the project will provide optimum benefits.

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