The economics of irrigated paddy in Usangu Basin in Tanzania: water utilization, productivity, income and livelihood implications

Abstract

Globally, there is a general lack of consensus on how the available water resources can be allocated efficiently and equitably among its competing uses. In irrigated agriculture, this decodes to the central question of how this sector can be balanced in the manner that it produces more ‘crops per drop’ using less water and releasing adequate water for use by other sectors while concurrently enhancing rural income and livelihoods. This requires that the values and costs of irrigated agriculture, at all levels, are well understood and appropriate interventions made. Based on this ground, this paper presents an economic analysis of the value of irrigated paddy in Usangu basin. It attempts to answer the question of what will be the effects if farmers in Usangu stop producing irrigated paddy. The analysis shows that: (a) about 576 mm 3 of water––currently consumed in paddy irrigation, or 345.6 mm 3––traded inter-regionally as “virtual water” would be utilized in alternative ways, either as evaporation from seasonal swamps within the basin or made available for other intersectoral uses, (b) there will be a shrinkage in the annual paddy supply (both at the local and national levels) of about 105,000 t of paddy (66,000 t of rice)-equivalent to 14.4% of the total annual paddy production in Tanzania, (c) an opportunity cost of about US$15.9 million will be incurred annually (equivalent to US$530.95 per annum per household practicing irrigated paddy in Usangu), and d) the country’s current account of the balance of payments will be affected by an average of US$15.9 million per annum. The effect will either be in form of annual decline in rice exports or increase in imports depending on the country’s supply and demand for rice.