Unlocking Economic Growth Under a Changing Climate: Agricultural Water Reforms in Pakistan

Abstract

Irrigation dominates water use in Pakistan, but from an economic perspective, irrigation water use efficiency and productivity remain very low. Conventional agronomic practices and irrigation water application methods, deteriorating irrigation infrastructure, and agricultural subsidies all act to repress a desire by farmers to improve their irrigation water use efficiency. We explore the performance of irrigation in the national economy out to 2055 using a computable general equilibrium model for Pakistan. We adopt a moderate population growth scenario and assume plausible rates of productivity growth by sector, and then explore how removal of agricultural subsidies and changing diets may affect irrigated crop choices and economic productivity under different rates of climate warming. We find that without critical reforms or efficiency improvements, water demand could easily exceed supply by 2055. However, with appropriate investments and reforms, water scarcity need not prevent Pakistan from ensuring food security and from reaching upper-middle income status by 2050. Critical to this transformation is ensuring that a fraction of the water saved through irrigation efficiency improvements is available to support faster growth in the industrial and service sectors, and a fraction is protected for environmental purposes.