Indian Institute of Management, Ahmedabad, Working Paper No. 2010-11-04, November, Ahmedabad Gandhi, Vasant P. (2010)

The experience of a few watershed programmes in India point towards the need for better improved governance for watersheds to play an effective role in raising agricultural productivity and conserving natural resources.

The emerging literature on institutions presents a new opportunity for analysing the evolution of various developmental programmes. Of particular interest is the role of institutions in the domain of small-holder agriculture that characterize rural economies in most developing countries. The success of programmes directed at increasing crop productivity, expansion of micro-irrigation, conservation of natural resources like soil and water crucially depend on the institutional strength and governance of the projects.

The absence of clear objectives of developmental programmes and institutional coherence in terms of interaction between different actors and stakeholders often lead to high transaction costs which leads to the non-viability and failure of projects. The lack of capacity to adapt to the changing external environment and non-appropriateness of scale of operation, which are integral part of institutional development, also often lead to shelving of programmes in poor and backward rural areas.

Improper institutional functioning almost always hampers development projects in rural areas, particularly those that depend critically upon the principles of cooperation between different sections of the rural population. Institutional strength in facilitating cooperation is all the more important as almost nowhere do we come across rural societies that are homogeneous; rather they are mostly over-ridden by conflicts of interest.

Watershed development in India has been one area, where the role of institutions evolves as a crucial factor in whether the declared objectives are attained or not, and whether such achievements are sustainable over time. The history of the idea of watershed development in India can be traced back in the colonial period in the nineteenth century. After independence, watershed development was emphasized as a policy for development of agriculture in dry-land areas with sparse rainfall and for soil conservation in catchment areas.

Multiple programmes of watershed were introduced across districts in the country, the Drought-Prone Areas Programme (DPAP), being a major one among them. Later in 1990s, watershed programmes were introduced in arable wetland areas also for increasing crop yields. While an expenditure of USD 500 million in undertaken annually for watershed development in India, the success of these programmes have been mostly of a mixed nature.

In this context, Gandhi in his paper attempts to develop a conceptual framework for watershed implementation. His formulations are based on the experiences of six watershed programmes in Andhra Pradesh, the state where such programmes has been most popular. The paper draws heavily from the case studies of Narasamapalli watershed, Jainallipur watershed, B.Pappuru watershed, Chandupatla watershed, Vattem watershed and Rathipalli watershed. The study uses the tenets of new institutional economics for developing a framework within which watershed programmes can be analysed and executed.

The author suggests that technical and economic rationality are at the heart of any watershed project. It is necessary for the sustainability of the programme that it engenders efficiency through the appropriate techniques as well as has economic viability in terms of returns from the investments. Environmental rationality is the other important pillar for a successful watershed programme. Rain-fed areas usually have scarce natural resources like water and fragile environments, which makes it important to consider the externalities of the programme and take care of conserving natural resources optimally.

Socio-political aspects are required to be handled based on a principle of fairness without which transaction costs may reach enormous levels leading to a failure of any programme. As watershed development affects different groups of people differently, there is a need to involve and incentivise all sections of the population. For example, development of watershed in any area affects landholders, landless and those dependent on forest resources in different ways and any feeling of deprivation that the programme may create among any group has the potential to subvert its long-term sustainability. The heterogeneity of rural societies therefore needs to be accounted for in any such programme.

Finally, organization issues like governance of the programme in a transparent manner is of immense important for a watershed programme to succeed. Efficient division of labour and effective coordination among the participants are required for developing the capacity of the programme to adapt to changing circumstances and focussed implementation of the recognized objectives. This also includes a transparent management of finances of the project. Given that major part of the capital for a watershed programme is provided by the government, it is necessary that institutional capability for effective coordination with government functionaries is developed for ensuring smooth and timely flow of funds.

The author also points out the major indicators, which can be used in assessing any watershed programme. A watershed programme should be judged by its capacity to raise water availability in the locality and also enhance the conservation of soil fertility and the environment. In general, the natural resource base should be augmented by any successful watershed programme. Finally, a successful watershed programme should not only improve crop and animal productivity and farmers’ incomes but also raise the income and living standards of non-farmers through organic linkages in the local economy.