Economics of water development on government lands in southern and southeastern Ethiopia.

Abstract

A regional range development project has been established in southern and southeastern Ethiopia, and the planning area has been jointly studied by the Imperial Ethiopian Government and the United States Agency for International Development (JSAID). I have been associated with both the feasibility studies and the actual implementation of the program from 1965 to 1969, and this experience with the project provided data for this dissertation. The area is inhabited by different ethnic groups who are almost all nomadic and have a subsistence life based on production of various classes of livestock. They have great variability in customs, religions, social and cultural beliefs, and languages. Excellent beef cattle are indigenous to the region, but there are many current cattle production and management problems in southern and southeastern Ethiopia. Among the most critical problems are diseases, poor nutrition, and lack of organized marketing. Lack of water is also a limiting factor; it causes shortage of roughage, lack of proper nutrition, retarded reproduction, high mortality, especially among young individuals, lack of surplus animals for market, and no contribution to national revenue. To solve some of the existing problems, the Imperial Ethiopian Government initiated a water development program in the early 1960Is, but because of the type of planning, there was very little economic benefit from the investment for range water development. There were no real defined objectives other than the provision of water to cattle with no management and maintenance once the initial construction was done. Water development in combination with veterinary service to solve the water shortage and disease problems was analyzed in this dissertation. Objectives were: to describe the existing physical, social, and cultural conditions in southern and southeastern Ethiopia; to analyze the economics of veterinary services and water development with and without management; and to discuss management and social changes necessary to insure that water development accomplishes desirable economic and social changes. Three development alternatives were considered and analyzed. The three alternatives were: mobile veterinary service, mobile veterinary service plus water development, and mobile veterinary service plus water development and management. A rate-of-return analysis was used in evaluating the economics of the development alternatives. Each alternative was analyzed for four different grazing capacities and six different percentage increases in sales each 5 years in addition to the basic 37 annual sale that now exists. Thus, 72 different sets of rates of return data were obtained. Under no circumstance should the planning rangeland be exploited and mismanaged through overgrazing and other improper management practices. With capital resources in short supply and long planning periods, exploitation of available range resources was not considered as an appropriate alternative. Rates of return greater than the 47 to meet the Government's return on investment would indicate the presence of net income to achieve social, cultural, and economic changes among producers in the planning area. At 4%, the Government will recover the money invested for development, but the producers may not gain from the investment. Based on an economic analysis of each of the three development alternatives, the best alternative satisfying the objectives as outlined in this dissertation would be the development with management alternative. With 2560 animal units per year per management unit grazing capacity, and with a 47 increase in animal sales each 5 years, desired objectives would be met. Based on the economic analyses made in this dissertation and if specific livestock sale goals are met in the early years of a project, a suitable annual payment scheme to recover development and maintenance costs while still providing economic incentives to producers could be formulated.