India struggles with water scarcity, a problem that poses especially huge implications for the country’s food security and rural livelihoods. The country has long-battled its scarcity issues through Watershed Development , a participatory approach to improve water management through afforestation and reforestation, sustainable land management, soil and water conservation, water-harvesting infrastructure, and social interventions. But while watershed development has been employed in communities throughout India, its potential long-term costs and benefits have not been well-understood or studied.
WRI recently partnered with an India-based agency, the Watershed Organisation Trust (WOTR) , to explore the economic costs and benefits of watershed development, as well as its potential use in climate change adaptation . In our new joint working paper , we discuss results from a benefit-cost analysis for one particularly water-stressed community, Kumbharwadi. We found that watershed development has provided more than $9 million dollars’ worth of food security and water management benefits to the community. WRI and WOTR also explored data collection and valuation challenges to figure out how to improve the understanding  of watershed development’s long-term costs and benefits.
Kumbharwadi’s story  shows that when done right, watershed development can yield significant food security, water management, and quality-of-life benefits.
Watershed Development in Kumbharwadi
Two villages are located within the 910 hectares of the Kumbharwadi watershed, providing a home to 171 families. Seasonal water scarcity continuously presents a huge problem in the community, as average annual rainfall is only 18.7 inches. Before watershed development interventions began, agricultural production was only possible for a single season of three-to-four months, prompting many villagers to migrate for work. Villagers relied on government-supplied water tankers for drinking water. Women frequently had to travel miles to find additional drinking water and fuel wood.
WOTR began implementing a watershed development project in Kumbharwadi  in 1998. The organization uses a learning-by-doing approach for projects: WOTR provides financial and technical resources, and watershed residents contribute their labor to implement technical and landscape treatments. To ensure the longevity of interventions, WOTR also creates a revolving maintenance fund for projects, supported by grant funding and villager contributions. After the project is complete, WOTR continues to provide guidance, and villagers are allowed to use interest earned on their maintenance fund to pay for operation and maintenance expenses and loans for farmers.
WOTR staff planned strategic interventions  with experts and villagers for each land parcel in the Kumbharwadi watershed . They developed strategies to trap and harvest rainwater, planted trees, created structures to prevent erosion and improve soil health, and built local knowledge and awareness of the importance of sustainable land management. They also helped create 11 female self-help groups  (SHGs), involving 143 women. These groups handled micro-finance loans for farm equipment and other needs. SHGs also undertook activities like establishing kitchen gardens and using cleaner cooking fuels to reduce indoor air pollution.
Economic and Social Benefits of Watershed Development in Kumbharwadi
These strategies yielded big results. Overall, the total cost of all project interventions from 1998 through 2012 (including capital costs, annual operation and maintenance costs, opportunity costs of foregone migratory labor, and management costs) ranged from $2.69 to $3.95 million dollars. The total value of benefits realized during the same time period—from improvements in crop and livestock production and avoided costs associated with water tankers and traveling for drinking water –was between $9.02 and $10.13 million dollars. The total net present value of the project is estimated to be between $5 and 7.4 million, or between $30,000 and $43,000 per household.
These economic benefits can be seen in tangible outcomes throughout the landscape. Groundwater levels rose from 6.5 meters below ground level to 3 meters. Erosion prevention and improved soil quality allows villagers to cultivate land previously categorized as wasteland. Crop yields have improved, and villagers are now able to grow crops year-round. Villagers are also able to produce more fodder for livestock, and they purchased higher-yielding, crossbred cows that considerably improve livestock income.
Beyond gains in agricultural and livestock income, the watershed development project has contributed additional market and non-market benefits. Villagers no longer rely on government-supplied water tankers and women no longer have to travel to find drinking water, thanks to improvements in water table levels. Tree-planting efforts resulted in carbon sequestration benefits worth $1 to $1.4 million over the life of the project.
The watershed development project also generated numerous important co-benefits  or for the two villages. While the working paper did not value these benefits due to data constraints, economic valuation techniques are available to do so if watershed development implementing agencies are able to collect sufficient information on related indicators for these co-benefits. Some of the co-benefits include:
• Improvements in habitat and biodiversity
• Increase in school attendance and enrollment
• Improvements in nutrition, dietary diversity, and human health
• Female empowerment through the creation of 11 self-help groups that manage micro-credit loans
• Improved resilience to drought and temperature fluctuations
• Improved community coordination and collective action resulting in reduced conflicts and transaction costs
Understanding these co-benefits, at least anecdotally, helps to improve awareness of the impacts of watershed development interventions.
Lessons on Scaling Up Successful Watershed Development
Improved economic valuation and project evaluation supported by systematic data collection can help improve the success of watershed development efforts throughout India. By conducting such analysis, decision-makers and planners can identify costs, benefits, challenges, and opportunities—critical knowledge for improving watershed development projects over time. WRI and WOTR’s working paper  shares some key lessons learned and recommendations for watershed development implementing agencies in India and beyond.
Creating more effective watershed development projects can not only alleviate water stress. These projects can help increase awareness of ecosystem services, build resilience to climate change, and improve overall quality-of-life for India’s rural communities.
- LEARN MORE: To explore the economic costs and benefits of watershed development—as well as challenges for conducting economic valuations and considerations for climate change adaptation—download our full working paper, Watershed Development in India: Economic Valuation and Adaptation Considerations .