THE IMPACT OF FINANCIAL AUTONOMY ON IRRIGATION SYSTEM PERFORMANCE IN THE PHILIPPINES

An assessment is made of the impact of removing operating subsidies to the Philippine National Irrigation Administration on the performance of its canal irrigation systems. The shift was found to have reduced s taffing levels and lowered operating expenses, while real irrigation f ee-based income held constant. Concurrent changes in operating rules a nd procedures led to an apparent increase in equity of water distribut ion in the agency's irrigation systems, resulting in a projected 13% i ncrease in area irrigated had water supply remained constant. This cha nge was significant at the 95% confidence level. This outcome is consi stent with income-maximizing behavior on the part of the agency, since it expands billable area and revenue potential. The observed improvem ent in system performance is seen as a consequence of the shift to age ncy financial autonomy.