This paper investigates the implications of smallholder farming, that is, characteristic of a community based water management system in Oman known as a falaj (pl aflaj). The aflaj are naturally sustainable, and for centuries have provided water in an arid region, supporting agriculture and livelihoods. With over three thousand active aflaj in Oman, the typical falaj is small; conveying enough water to irrigate a relatively small amount of land, and this water and land is further subdivided among many farmers. The implications of these smallholdings on the economic viability of the falaj were investigated by studying one falaj system. It is found the small holdings of water and land imply a typical farmer cannot realize economies of scale in farming, implying average costs are high and farm profits are low. As the aflaj are community managed, the low economic value of the falaj implies there may be insufficient funds for maintenance of the falaj, thus threatening their sustainability.
Key words: Traditional agriculture, water management, community based natural resource management system, smallholdings.
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