Economic Assessment of Transforming Rainfed to Irrigated Agriculture in a Drought-Prone Region of Central India

Climate change-induced water stress greatly challenges rice productivity, particularly in rainfed regions with limited irrigation infrastructure. These regions, identified as economically water-scarce, could benefit from increased irrigation if appropriate economic resources are made available. However, a current knowledge gap exists regarding how climate-induced economic impacts vary with the transformation from rainfed to irrigated agriculture in economically water-scarce regions. This study investigates the economic implications of climate change under rainfed and irrigated conditions in the near future (2030s). The assessment was done for two shared socio-economic pathways— SSP2-4.5 (moderate) and SSP5-8.5 (extreme) scenarios using the Soil and Water Assessment Tool (SWAT) model. The simulated rice yields were used for estimating economic impacts through an econometric approach. The results suggest that under rainfed conditions, rice yields are projected to change by ~ -15% to -2% and ~ -15% to +2% for SSP2-4.5 and SSP5-8.5 scenarios, respectively. However, the transformation of rainfed to irrigated agriculture leads to a positive shift in rice yield by ~ -1% to 7.3% for the SSP2-4.5 scenario and ~ -4% to 7.25% for the SSP5-8.5 scenario. This transformation can help reduce the region’s economic burden by ~$48.8M for SSP2-4.5 scenario and by ~$20.8M for SSP5-8.5 scenario. The implications of short-term drought events on the region’s economic response to climate change will also be discussed. The findings of this study provide valuable insights for the management of highly vulnerable agricultural systems, offering guidance for policymakers aiming to enhance resilience in the face of climate change.