What Can We Learn From Development of Irrigation Management Transfer In Mexico1?

From Phase-I to Phase- II: IMT in Main Canal Networks

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From Phase-I to Phase- II: IMT in Main Canal Networks

The Phase-I “transfer of the secondary canal network” is almost completed. From 1991 to 1993, 2 Mha were transferred (Figure 4). Now close to 3.4 Mha (or 98%) of the total large-scale irrigation area has been managed by 474 WUAs, representing over 550,000 water users. There are only 20,427 ha where IMT has been unsuccessful, either because of difficulties in defining module boundaries, or the secondary networks have high O&M costs, or they are located in marginal land or conflict zones.

The phase-II was to transfer the main network of an ID to WUAs that shared the network and agreed to establish a federation. In Mexico, such a federation is legally termed as a Limited Liability Societies (or Sociedad de Respondabilidad Limitada, SRL). SRL (with the first one established in 1992) is responsible to distribute water from the head-works to a delivery point, at which a WUA takes over. SRL is thus taking over control of the main system from CONAGUA, as well as a percentage of the water fee to cover SRL expenses. The remaining water fee percentage keeps CONAGUA in charge of only the head-works and access roads.

While phase-I has made significant progress, phase-II has been almost at a standstill since the year 2000. There are 13 SRLs so far, covering an area of 1.5 Mha –less than half of total transferred area. It is noted that the bigger IDs and those located in more profitable agriculture zones are already under a SRL. There are other WUAs that have chosen an alternative to SRL, i.e.. rotation of responsibility among WUAs for their main network. The remaining WUAs are simply not interested in forming SRL, mainly because of a potentially significant increase in the self-sufficient water fee given specific characteristics of their infrastructure – often large main network with high maintenance costs, or small command areas with high maintenances costs. The CONAGUA is taking a “go-slow” approach in this stage and has not speeded announced up the Phase-II process.

Figure 4. Mexico Irrigation Management Transfer program (1990-2006)

Source: Adapted from CNA, 1999 for years 1990-2000; Adopted from Unified System of Water Basic Information, (SUIBA,CNA) for years 2000-2002; ANUR (2003; 2006)

WUA and River Basin Management

In a broader context, irrigation management is a part of overall water resources management. Water management of IDs and irrigation O&M depend on the water allocation to the agriculture sector by river basin councils. According to the NWL5, basin council should be established in every river basin as the authority for the coordination between CONAGUA, the three levels of government -federal, state and municipal- and water users within that basin. Currently, there are 25 Basin Councils in the country. Farmers, through WUAs and SRLs, interact with their river basin council through an agriculture user representative who is usually an ID water user. The CONAGUA coordinates the election of the agriculture user representative. Firstly, a state agriculture user representative is elected per each state located within a basin; normally this representative is elected among the WUAs’ executive board members as their organization skills are stronger than in the small-scale traditional irrigation systems. Secondly, the basin agriculture user representative –and a substitute- are elected among the representatives of all the states.

It can be said that IMT gave the ID water users a voice in the basin water management. Nevertheless, there is a lack of strategy for communication and feedback from grass-roots to the basin agriculture representative. Raul Medina, who was the first agriculture water use representative in the Lerma-Chapala basin, one of the most important and over-exploited basins in Mexico, says:
“when I represented the water users at the basin level, I could see clearly how well we were supported by the legal system under the NWL. A lot of doors opened to us given that I was legally representing a specific sector. The authorities gave me audience and I could do a lot of things. A water user, not an institution, had an important role in the basin council, had real participation that could make a difference. The agriculture water use representative was not often a desired presence when it comes to negotiations of deals. But our presence was necessary.”
Looking Forward – Sustainability of WUA

The success of the IMT can be measured by the sustainability of WUA. The main goal of IMT was to solve the problem of deferred maintenance. If WUA fail, the situation would be back to where it started in the late 1980s. So, how well are WUA doing?

One should first look at the “self-sufficiency water fees”. The water fee collection rate, per ANUR, is around 85% in most districts. This is good rate compared to most countries. At national level, the cost recovery averages at 72% (irrigation season, 2000-2001) (SINDHR, 2003). Of the total number of IDs transferred, only 40% reached above this level, with a wide range of fluctuation –from 20% to 100%. These numbers suggest that less than half IDs are doing well. However, the situation in reality is actually better as a vast majority of WUA have additional income from the “special fee collection”, which, as mentioned before, can be as high as the actual water fees. Some WUAs practice a fixed water fee labeled as “maintenance”, in addition to the normal water fee. Instead of asking farmers to pay whenever is required for a “special fee” (when a rehabilitation work is needed), these WUA have the “special fee” for every season at a fix rate.
The size of WUA also matters. The division of the ID into modules shaped the WUA characteristics and had the strongest implication in their daily O & M activities:
“…the size of our module was very small, so we didn’t have enough money to hire support staff… During the first irrigation season, the secretary from another WUA helped us in collecting the water fees.” (Raul Medina, Rio Lerma WUA)
According to studies by Santos-Hernandez et al (2000), the unit administrative and maintenance costs ($/ha) tends to decline as the physical size surface of the irrigation module increases; the size reaches around 5,000 ha, after which the unit cost tends to be relatively constant. Unit operation cost ($/ha) also follows the same pattern until the size reaches 12,000 ha, after which it increases as the size increases. These observations vary depending on the type of infrastructure, water sources, and design of irrigation infrastructure. Based on experience in Mexico, the minimum area required for a WUA to be self-sufficient seems to be is around 7,000 ha for those cultivating high value crops, and 10,000-12,000 ha for those cultivating heavily grains.
Thus, using the size of WUA as one criterion of sustainability, Mexico has nearly half rated sustainable. The other half have high unit costs that make them financially vulnerable in keeping self-sufficiency. There have been proposals to aggregate small WUA into bigger ones to improve financial strength of WUAs. Some studies are being undertaken but aggregation has not started.

In addition to the above indicators, a case-to-case analysis is needed for each WUA to assess its sustainability. For instance, El Grullo WUA - the first WUA established – has since been increasing water fees by only 5% annually, but has not suffered any differed maintenance. It even has savings, which were used to build a new WUA office recently. But there are also WUA who have less funds now for O&M than at the early years of IMT (Palacios et al, 2002).

Two external factors impacted the growth of WUAs: national economy and agriculture sector performance, and droughts.
National economy and performance of the agriculture sector. Mexico’s high inflation throughout the 1990s caused water tariffs to decrease in real terms. Farmer income has decreased, making it difficult for WUAs to keep pace with inflation. A survey of farmers in 2005 found that only 20% had seen their incomes rise over the past ten years. Agricultural growth in Mexico has lagged behind (1.6%) overall economic growth of the country. From 1985, agriculture input costs have been increasing at a higher rate than agriculture output prices. The sector growth during 1990-1997 was at 0.5% annually. Meanwhile, population growth averages at 2.25% annually, leading to an increase in the food import (Palacios et al, 2002). Crop diversification has failed to materialize, so maize and wheat continue to be the two most grown crops, leading to income loss when market prices for these grains fell by 40% in the 1990s (Garces, 2002). These factors constrained modernization of the irrigation sector, and thus limited the income and growth of WUA. To coup with these difficulties, some WUA and SRL have formed parallel companies - credit unions, agriculture input supply, etc --in order to support agriculture production of their members and to gain additional income. These companies are owned by WUA or SRL but administrated independently.
Droughts. The water fee collection is based on volumetric deliveries and is thus a function of how much water is provided. During a dry season, when irrigated area is substantially reduced, the WUA income drops accordingly. In some cases, WUA were unable to even cover their administrative costs. During the 1995-1996 droughts, the government had to fund 100% of O&M costs for some WUAs to prevent them from collapsing (Garces, 2002; Palacios et al, 2002). There was a proposed methodology to estimate water fees in two parts: one in proportion to the area benefited from irrigation, in order to pay the permanent costs of maintenance and administration; and two by volume of water used, in order to encourage the efficient use of water (Palacios et al, 2002). This has yet to be implemented.

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