Why subsidies alone won’t drive adoption of water-saving technology: The hidden role of electricity infrastructure and other challenges in Uzbekistan

Why subsidies alone won’t drive adoption of water-saving technology: The hidden role of electricity infrastructure and other challenges in Uzbekistan

Uzbekistan faces a water crisis. With agriculture consuming more than 90 percent of the country’s water resources and climate change threatening food security as well as the remnants of the Aral Sea, the government has prioritized promoting water-saving technologies for irrigated agriculture, to reduce volumes of water delivery to farmers’ fields and also associated electricity volumes required to lift this water to irrigated areas. To nudge farmer adoption of these technologies, the government has been providing subsidies for specific technologies, in particular drip irrigation but also laser land leveling. Installation costs for these systems are significant; for example, drip irrigation requires an average investment of approximately UZS 25 million (USD HH2,000–2,200) per hectare. 

Through a series of presidential decrees – including UP-6024 (2020) establishing the Concept for Water Sector Development 2020–2030 and PQ-144 (2022) promoting drip irrigation in cotton production – the government offers subsidies covering 30–40 percent of installation costs (approximately UZS 8–12 million or USD 660–1,000 per hectare), combined with five-year land tax exemptions for adopters and preferential bank loans to finance the remaining costs.

But our research with more than 900 farmers across Uzbekistan reveals an uncomfortable truth: The intended water savings from the generous subsidies may not be achieved.

To understand the values farmers place on different water-saving technologies, and their willingness to pay for these technologies, we deployed a discrete choice experiment with more than 900 irrigating farmers in Uzbekistan. Rather than asking hypothetical questions, we presented farmers with a sequence of real subsidy scenarios and identified the price point at which they would switch from “yes, I would install” to “no.” We found, surprisingly, that approximately one-third of farmers in the study would never install drip irrigation – even if the equipment was close to fully (92 percent) or fully subsidized. Moreover, even at UZS 20 million (USD 1,550) per hectare, which is around 80 percent of the full installation cost, only slightly more than half of all respondents show interest in adoption. Thus, increasing subsidies to unsustainable levels will not solve the adoption problem. So what will?

Following the wire: Electricity as a hidden barrier

Drip irrigation systems in Uzbekistan typically require electric water pumps to maintain adequate water pressure. This creates an obvious dependency on electricity infrastructure. To assess these connections, we linked our measurements of farmers’ willingness to pay for drip irrigation installation with detailed data on electricity access and reliability. This analysis revealed three key findings.

1) Electricity connections increase demand

Farmers with existing electricity connections are willing to pay approximately UZS 2 million (USD 155) more per hectare for drip irrigation than those without an existing connection. This represents a substantial premium, corresponding to roughly 25 percent of the subsidy level.

For farmers without an electric connection, distance to the nearest grid connection strongly predicts if they will ever consider adoption. Each 10-percent increase in distance to the grid raises the probability of “never installing” an energy-thirsty irrigation technology by nearly 1 percentage point. For the most remote farmers in our sample, this penalty translated to a massive 43-percentage-point increase in the likelihood of non-adoption compared with those with farms close to the grid. Farmers located far from electricity infrastructure are not postponing adoption; the technology simply remains entirely out of their reach. 

2) Reliable electricity matters for demand as much as access

Importantly, having electricity is not enough. The quality of the energy connection matters as much as access. We measured electricity reliability through reported outage days. The interaction between electricity connection and outage frequency tells a compelling story: each additional day of power outages reduces willingness to pay by UZS 30,000–50,000 (USD 2.5–4.5). 

This means that the electricity access premium effectively disappears after approximately 45–65 days of annual outages. In regions with frequent power cuts – common in rural Uzbekistan during peak irrigation season – the benefit of having a grid connection can disappear when outages increase. Reliability of electricity is particularly essential for drip irrigation where only drops of water are provided in a precise, constant schedule to crops to exactly meet their water needs; in such cases, power outages of just 1 or 2 days can wipe out the entire harvest. While most farmers with electricity connections reported few disruptions (provincial medians are 0–3 outage days per year), reliability varies by region. In Narpay district the median is 10 outage days; in Rishtan and Buvayda districts it is 5 days. At the other end, roughly 12 percent of connected farmers in Fergana and Samarkand experience 30+ outage days annually, enough to erode the electricity access premium.

3) Experience with drip technology suggests yet further challenges

Perhaps our most intriguing finding involves farmers who already used drip irrigation. Even farmers with electricity grid access reported significantly lower willingness to pay for additional drip installations (approximately UZS 1.1 million or USD 90 less). Interestingly, this does not appear to reflect negative experiences with electricity reliability – current drip users facing unreliable electricity actually report higher willingness to pay than those with reliable power, suggesting successful adopters can handle electricity variances, possibly by using alternative sources of energy such as generators or solar panels.

The limited role of electricity infrastructure and reliability following adoption is further revealed by the group of disadopters, that is, farmers who stopped using drip irrigation. They report willingness-to-pay values nearly UZS 7 million below never-adopters. However, only 4.8 percent of disadopters cite electricity as a problem. Instead, they report high rates of repair costs (24 percent), low perceived efficiency (24 percent), and maintenance challenges such as weed management (33 percent). Their lower willingness to pay reflects negative experiences with the technology’s implementation rather than electricity constraints.

This distinction matters for policy. While electricity infrastructure investments can unlock initial adoption (see findings 1 and 2), sustaining adoption requires addressing post-installation support: affordable repairs, availability of spare parts, and technical assistance.

Beyond subsidies: What really matters

Several lessons emerge that can guide Uzbekistan’s agricultural and irrigation modernization strategy.

First, subsidy programs should be appropriately targeted. Offering drip irrigation subsidies in areas with unreliable electricity or no grid access is likely to yield poor returns. Our adoption study curve shows increasing marginal returns to subsidies, but the increase is modest. This pattern suggests that infrastructure-constrained farmers require substantially higher subsidies to overcome fixed barriers like grid connection costs. Rather than pushing subsidies to unsustainable levels to reach these farmers, coordinating electricity infrastructure investments with subsidy programs could shift the entire curve leftward, achieving the same adoption rates at lower fiscal cost.

Second, electricity infrastructure investments and irrigation modernization should be coordinated. Currently, these two sets of investments are housed in different ministries – Energy versus Water Resources and Agriculture – with separate budgets, priorities, and timelines. Our results suggest that the two entities should plan jointly for energy and water savings to occur. A drip irrigation subsidy planned for a village that is scheduled for later grid expansion should be delayed; the same subsidy in a village with stable power could be deployed immediately.

Third, reliability improvements may matter more than new connections. For areas already on the grid but experiencing frequent outages, investments in grid stability could accelerate adoption among farmers who currently see drip irrigation as too risky. The marginal farmer deciding whether to adopt may be more sensitive to outage frequency than to the subsidy amount. 

Fourth, solar-powered irrigation systems could bypass grid constraints entirely. Our survey reveals that less than 1 percent of Uzbek farmers currently use solar panels, yet this technology eliminates dependence on grid reliability and generates maximum power during peak irrigation demand periods. Several countries already bundle solar and drip irrigation subsidies, including India, Morocco, and Pakistan, and Uzbekistan’s recent solar subsidies could be similarly integrated with existing drip irrigation programs.

Fifth, providing a subsidy without sustained support is prone to lead to resource wastage. Rather than providing subsidies or in addition to providing subsidies, farmers need support with agronomic practices to avoid weed occurrence, extension support on maintaining drip lines to avoid clogging and poor flow, as well as access to spare parts and accessible repair services. Disadoption for these reasons creates negative spillovers, with neighboring farmers observing such failure unlikely to adopt themselves. This suggests that ensuring the success of early adopters – through reliable electricity and continued technical support – may be more cost-effective than expanding subsidies to hesitant farmers. 

The broader lesson

Uzbekistan’s case is not unique. Across Central Asia and other water-stressed regions, governments are promoting water-saving irrigation technologies. The instinct to offer subsidies is understandable – they are visible, politically popular, and administratively straightforward. However, our research suggests a more integrated approach is needed. Water-saving technologies depend on complementary infrastructure, including reliable electricity and reliable after-sales support for repairs and maintenance. Ignoring these dependencies leads to subsidies that look generous on paper but fail to move farmers (or water) in practice. Farmers who say they will never adopt are not irrational. They are making reasonable calculations based on their infrastructure reality. Changing their minds requires changing that reality, not just the price tag.

Anton Liutin is a PhD student and Paul Castañeda Dower is an Associate Professor of Agricultural and Applied Economics at the University of Wisconsin-Madison; Muzna Alvi is a Research Fellow and Claudia Ringler is Unit Director with IFPRI’s Natural Resources and Resilience Unit.