The need for achieving efficient, equitable and sustainable use of water resources to meet water demands of different sectors is pressing, particularly in areas where water resources are dwindling. Along with this is the quest for having a good understanding of the value of water in its different uses. Using a simplified model derived from the residual imputation approach (the Change in Net Income Model) we assess the value of water in irrigated paddy and hydropower generation in the Great Ruaha River Catchment (GRRC) in Tanzania. The estimated productivity of water (PW) in irrigated paddy ranges from 0.059 to 0.250 kg/m3 (for withdrawn water) and 0.126 to 0.265 kg/m3 (for consumed water). The PW in hydropower generation is estimated to range from 0.45 to 1.68 kWh/m3. In monetary terms the value of water in irrigated paddy is estimated at 15.3 Tanzanian shilling (Tsh)/m3 (for water withdrawn) and 0.19 Tsh/m3 (for water consumed). The values of water for hydropower generation are relatively higher than for irrigated paddy, ranging from 59 to 226 Tsh/m3. Yet, irrigated paddy also supports livelihoods of about 30,000 agrarian families in the GRRC, with gross revenue of about Tsh 15.9 million per annum and GRCC paddy contributes about 14–24% of national rice production. We conclude that understanding the value of water in its alternative uses is key to fostering informed debate on water management and allocation, identifying the basis for making ‘agreeable’ trade-offs, the potential for improvement and creating linkages with water allocation options particularly in agricultural-based economies, where agriculture competes with other sectors and where water re-allocation decisions may involve large transfers of water from the sector generating the highest pro-poor returns (agriculture for this case) to the sectors generating the highest economic returns (hydropower generation and industrial uses).
Agricultural Water Management (2008) 85 (8) 984-992 [doi:10.1016/j.agwat.2008.03.008]