Economics of salinity control in Sri Lanka: Some exploratory results

Abstract

This paper documents the results of a financial and economic analysis of salinity control in one of the major irrigation projects in Sri Lanka. Conventional benefit-cost analysis was adopted in computing the benefit-cost ratios on the basis of plausible assumptions. The study indicates the returns to salinity control to be high, both from the financial and the economic points of view. The sensitivity of the results to changes in key parameters revealed that the returns are most sensitive to the yield gains achieved through drainage installations. In the economic analysis, the largest impact was observed for the price of paddy. The rates of return obtained in the economic analysis are higher than the financial returns, indicating the usefulness of government policy instruments such as subsidies for salinity control.