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Watershed Development in India

Economic Valuation and Adaptation Considerations

by Erin Gray and Arjuna Srinidhi - December 2013

This paper examines how economic valuation can improve our understanding of watershed development and how to overcome challenges related to data collection, valuing direct and indirect benefits, and climate change adaptation.

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Key Findings

In a benefit-cost analysis of a WSD located in the Kumbharwadi watershed of Maharashtra, results show a net present value of $5.08 to $7.43 million over the 15-year project period, and a positive benefit-cost ratio of 2.3 to 3.8, showing that this has been a positive investment for the 171 households of the Kumbharwadi watershed. The BCA results include only improvements in agricultural and livestock income, as well as avoided costs of traveling for fuel and water and government-supplied water tankers. We estimate that tree planting efforts resulted in carbon sequestration benefits worth $1 to $1.4 million. Additional co-benefits which were not valued due to data constraints included:

  • Improvements in habitat and biodiversity.
  • Increase in school attendance and enrollment.
  • Improvements in nutrition, dietary diversity, and human health.
  • Female empowerment through the creation of 11 self-help groups that manage micro-credit loans.
  • Improved resilience to drought and temperature fluctuations
  • Improved community coordination and collective action resulting in reduced conflicts and transaction costs.

Key data collection challenges for economic valuations of WSD include:

  • Lack of consistency in data reporting for social, environmental, and economic indicators of WSD projects by implementing agencies.
  • Lack of consistency in data collection as project impact assessments are often completed by different actors.
  • Insufficient acknowledgment of non-market and co-benefits that can help generate greater awareness of ecosystem services and societal benefits, as well as provide a broader picture of WSD impacts.
  • Lack of post-project impact assessments that can help determine whether perceived benefits are actually long-term benefits that contribute to resilience to drought and other factors.

Key considerations and recommendations for climate change adaptation interventions and projects include:

  • Economic valuation can provide information to help develop and tailor CCA interventions and strategies.
  • Economic valuation of WSD projects should leverage community participation for data collection.
  • Economic valuations should consider market, non-market, and co-benefits of WSD projects.
  • Economic valuations should consider how benefits are distributed among economic classes, on-farm and off-farm stakeholders, and genders.
  • Guidance is needed from WSD funders and researchers to help implementing agencies standardize data collection processes and reporting protocols.

Executive Summary

Watershed Development (WSD) in India has been a part of the national approach to improve agricultural production and alleviate poverty in rainfed regions since the 1970s. Watershed Development programs aim to restore degraded watersheds in rainfed regions to increase their capacity to capture and store rainwater, reduce soil erosion, and improve soil nutrient and carbon content so they can produce greater agricultural yields and other benefits. As the majority of India’s rural poor live in these regions and are dependent on natural resources for their livelihoods and sustenance, improvements in agricultural yields improve human welfare while simultaneously improving national food security.

While WSD receives a significant amount of government attention and funding, there is not a clear understanding among practitioners of the overall effectiveness of WSD programs in meeting the objectives of food security and poverty alleviation. There is also little concrete evidence of how revitalized ecosystems might improve resilience to climate change. A reason behind this lack of understanding is that data collection and evaluation efforts for WSD have lacked rigor and consistency between WSD implementing and administrative agencies. Additionally, evaluations of WSD have tended to focus on describing changes in key indicators and providing project narratives, and as a result, have not provided a clear picture of the economic, social, and environmental benefits for WSD beneficiaries.

This paper argues that there is a clear need for more systematic economic valuation of WSD initiatives to better prioritize government funding and WSD guidelines, foster greater awareness of the benefits of ecosystem restoration for food security and poverty alleviation, and improve the planning and implementation of projects. Economic valuation is a useful tool that assigns monetary values to benefits of WSD, including social and environmental benefits. Economic valuation can contribute to improved WSD decision-making, awareness, and planning, by allowing comparison of project costs and benefits through decision support tools like benefit-cost analysis.

In 2012, the World Resources Institute (WRI) partnered with a WSD implementing agency, the Watershed Organisation Trust (WOTR), to conduct an economic valuation of one of its WSD projects using benefit-cost analysis (BCA) and review their recent Climate Change Adaptation (CCA) Project. WOTR is an NGO based in Pune, India, that has been implementing WSD projects since 1993. It is one of the first WSD organizations to develop a CCA strategy in India. The objective of this partnership was to better understand the need for economic valuation and related data collection and analysis challenges, as well as to foster an understanding of CCA interventions. This paper provides a history of WSD and evaluation measures and challenges. We also present methods and results from our BCA of a WOTR-implemented participatory WSD project located in Maharashtra and highlight our data collection challenges. We then provide an overview of WOTR’s CCA Project, which was initiated in 2009 and has been implemented in nearly 50 villages in three states, and discuss related valuation considerations and recommendations.

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