Schematic Presentation Of Policy Options

A part of the effort at putting together a national water strategy will necessarily consist of choosing the most appropriate package out of a menu of optional policies like those described in the foregoing sections and others that may be developed through further analysis. To facilitate an overview of the options, Table A.1 lists them and indicates their qualitative impacts by sign (+ or -) on water savings, on the government budget, on the urban population, on the rural population based in rainfed areas, and on the rural population which uses pump agriculture. The urban population would benefit from all water saving measures through greater and more regular availability of water. For the sake of clarifying the mechanisms at work, the effects shown in the table are only the ones in addition to that general benefit.

As defined in the table, the rural rainfed population includes farm families dependent on both rainfed and spate agriculture. The effects noted with regard to population groups refer to changes in economic welfare. Some of the changes may be accompanied by an intersectoral shift of popula tion, but the effect refers to the population in its sector of origin.

Two additional measures, besides those discussed above, have been added at the bottom of Table A.1: a reduction of the generalized subsidy on wheat, and retaining the subsidy on liquified petroleum, gas (LPG). As the notes to the table explain, increasing the farmgate price of wheat would be important in order to raise the profitability of rainfed agriculture. It would be desirable to retain in rural areas as much as possible of the population which gives up tubewell agriculture, in order to minimize or stretch out the transition costs, and rainfed cultivation is one of the rural options. For the same reason, it is important not to encourage additional out-migration from rainfed agriculture, in addition to that which is foreseen from tubewell agriculture. The present generalized subsidy on wheat, effected through a low and controlled price and a tariff exemption, could be replaced by one that is targeted on the poor, at a much reduced cost.

The LPG subsidy has been added to the list of options because the present trend of rural households, in shifting from fuelwood to gas for cooking, should be accelerated in order to conserve trees. Although the forestry sector is small in Yemen, it is important for retaining water and conserving soil, and also for inducing more rainfall. A subsidy of this nature could be justified through its externalities. Programs of rural reforestation are included in the list as well, but it should be noted that their success will depend in part on more widespread adoption of LPG for cooking.

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