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Watershed Development in India: Economic Valuation and Adaptation Considerations

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 (Ahmad et al. 2011; GOI 2012; Kerr 2002).

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. Furthermore, there is little concrete evidence of how revitalized ecosystems might improve resilience to climate change and conversely, how increasing rural dependence on climate-sensitive agricultural income might increase vulnerability.

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 prioritise government funding and WSD initiatives, 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 benefit. 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. The WOTR is an NGO based in Pune, India, that has been implementing WSD projects since 1993. It is one of the first WSD organisations 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 partnership informed the development of this paper. We can provide 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.

Through this BCA we provide an overview of a typical WSD project and discuss costs and benefits, including market, non-market, and co-benefits. We compare costs and benefits from the project initiation date in 1998 through 2012, using net present value and benefit-cost ratio as indicators of project success. Results of the analysis show a net present value ranging from $5.08 to $7.43 million over the 15-year project period, and a positive benefit-cost ration of 2.3 to 3.8, showing that this has been a positive investment for the 171 households of the Kumbhrarwadi watershed. Key data collection challenges included:

  • Lack of consistency in data reporting.
  • Lack of consistency in data collection.
  • Insufficient acknowledgement of non-market and co-benefits.
  • Lack of post-project impact assessments.

Finally, we provide an overview of WOTR’s CCA Project which was initiated in 2009 and has been implemented in nearly 50 villages in three states. We argue that as more PIAs implement climate adaptation projects. Practitioners and those interested in valuation can begin building better and more consistent data collection strategies in their operations. We conclude by discussing adaptation-related valuation considerations and recommendations for WSD, including:

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

Suggested citation

Erin Gray and Arjuna Srinidhi. 2013. “Watershed Development in India: Economic valuation and adaptation considerations” Working Paper. Washington, DC: World Resources Institute.

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