Humboldt-Universität zu Berlin - Quarterly Journal of International Agriculture

Quarterly Journal of International Agriculture No. 4/09

Economic viability of rehabilitation of traditional water harvesting system: empirical evidence from South India

V. Ratna Reddy
Livelihoods and Natural Resources Management Institute, Hyderabad, India

Bhagirath Behera
Indian Institute of Technology, Kharagpur, India


The objective of this paper is to examine the economic viability of the tank restoration programme in the drought prone regions of Andhra Pradesh, India. Using the methods of cost-benefit analysis, net present value and internal rate of return the paper finds that net returns turned out to be positive in all the three rehabilitated tanks. Interestingly, net returns are not proportional to size of the tank, which indicates that the high per unit costs in the case of small tanks is more than upset by the higher incremental returns from crops, which is facilitated by double cropping. The economic viability of tank restoration is also reflected in the cash flow measures, which are often used to take investment decisions. Benefit-cost ratios are quite high in both the scenarios for all the three tanks. Net present value of the benefits is positive for all the three tanks. And internal rate of return is quite high for all the tanks. Large size tanks seem to perform better with regard to all these measures.

Keywords: tank restoration, benefit-cost analysis, Andhra Pradesh, South India

JEL: Q12, Q25

Vol. 48 (2009), No. 4: 321-336