THE IMPACT OF UNEVEN ALLOCATION OF IRRIGATION WATER ON DYNAMICS OF AGRIBUSINESS AND INCOME INEQUALITY: THE CASE OF MAHAWELI DEVELOPMENT PROJECT, SRI LANKA

Several studies on water allocation between head and tail reaches have reported that farmers at tail-end of the canal receive a disproportionately small amount of irrigation water and at times no water at all. This is,however, still one of the unresolved issues in water distribution policies, especially in large- scale irrigation schemes in Sri Lanka. The ultimate repercussion of this situation is that the tail-end farmers face high level of uncertainty and income fluctuation in their farming. However, in Sri Lanka the available literature does not provide empirical evidence with regard to the consequences of head-tail water inequality on agribusiness and income inequality. This paper investigates the impact of uneven distribution of irrigation water on performance of agribusiness and income disparity among head and tail farmers in large scale irrigation schemes in Sri Lanka. A field survey was conducted to collect the necessary information for the analysis from a sample of 302 farmers comprising both head-end and tail-end regions in Mahaweli system B. Descriptive statistics were used to measure the existing situation of agribusiness and Gini index and Gini decomposition coefficient were used to measure income disparity. Sen Poverty and Head Count Indexes were used to measure poverty. The overall annual total income disparity between two groups was 0.6362. It is worst situation compared with the national level as well as rural level. The study explored about 31.12 percent of tail-end farmers and 20.12 percent of head-end farmers were below national poverty line mainly due to poor performance of their agribusiness. Sen Poverty index was 0.231 for head section and for tail section it was 0.477 being almost double compared with head section. In order to overcome the income inequality between head and tail farmers, effective participatory policies were suggested.Key Words: Agribusiness, Head-end, Tail-end, Income Inequality, Gini Coefficient and Sen Poverty IndexFor full paper: fmscresearch@sjp.ac.l