Estimating the economic and environmental benefits of a traditional communal water irrigation system: The case of muang fai in Northern Thailand

The muang fai irrigation system is a traditional, small-scale, communal irrigation system that has been practised for centuries in northern Thailand. The muang fai is governed by a set of pre-established rules which, to a large extent, resemble Ostrom's (1990) well-known principles of effective common property resources. The system is now being challenged by the introduction of various alternative irrigation methods, including privately-owned underground pump irrigation. This paper compares the muang fai system with underground pump irrigation in terms of its yield, capacity to generate revenue and water use efficiency. For this purpose, we collected farming and socio-economic information from 481 farmers in northern Thailand who are either in the muang fai system or are underground pump users. We used this data to apply the Propensity Score Matching (PSM) technique to estimate the difference in yield, farm revenues and water use efficiency of farms using different irrigation systems. Using Kernel matching, for example, we found that muang fai participation increases average farm revenue by about 6080 Baht (US$1000) per hectare per year (40.6%). We also found that muang fai participation can conserve 48% of water. Both the revenue increase and gain in water use efficiency are statistically significant and robust to various different matching techniques.