During the 1980s, external irrigation investment in Asia fell by about 50 per cent compared to levels prevailing in the 1970s. As a consequence, the rate of expansion of irrigated area in the region has fallen to less than 0.5 per cent per year from earlier highs of 2.0 to 2.5 per cent. A variety of factors are responsible for these reductions, though principal ones are the general abundance of foodgrain in the world, the resultant low level of projected future prices, and the rapidly escalating capital cost of surface irrigation development. In general the drop in new investment appears to be a rational response to these conditions.