Self-Governance in Farmer-Managed Irrigation Systems in Nepal

Effective governance of natural resources is a key challenge facing many developing nations. There is general agreement that without effective institutions, resources will be underprovided and overused. What is less certain, however, is what these institutions might be and who ought to provide them. Should governments take the lead in supplying institutions and organizing collective action, should this task be resolved through market forces, or should resource users of a "common pool resource" be encouraged to take the lead? This paper presents the view that it is difficult for external actors to design optimal institutions and enforce rules at low cost because solutions tend to be conditional and situation specific. Therefore, local resource users are better equipped to develop or be major participants in developing institutional solutions. Support for this idea is drawn from empirical studies of irrigation systems in Nepal. Comparisons of the performance of farmer-managed irrigation systems with that of agency-managed irrigation systems show that the former consistently out perform the latter on most performance measures. This paper offers two key insights: developing effective institutions is as important as developing physical infrastructure and local resource users may be able to offer better institutional solutions under certain conditions than government agencies when resources are local in scale.