Social contracts, markets and efficiency: Groundwater irrigation in North India

Banerji, A.; Meenakshi, J.V.; Khanna, Gauri

doi:10.1016/j.jdeveco.2011.07.005

Cited by 26 publications

(21 citation statements)

References 16 publications

(20 reference statements)

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“…In fact, the rate at which water is sold is usually equal to the internal rate at which informal water cooperatives sometime charge their own members as a means to recover their collective expenses (power bill and maintenance costs). This sort of a social contract is also observed by Banerji, Meenakshi, and Khanna (2012) in another part of India. Many well owners also reported a social obligation to provide their neighboring water buyers with an adequate supply of water in order to maintain a long-standing relationship.…”

Section: Discussionsupporting

confidence: 66%

Can Electricity Pricing Save India’s Groundwater? Field Evidence from a Novel Policy Mechanism in Gujarat

Fishman¹,

Lall²,

Modi³

et al. 2016

Journal of the Association of Environmental and Resource Econom

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Efficient pricing of water and energy, advocated by economists as a means of achieving more efficient allocations, is often politically infeasible, especially in developing countries. In India, for example, subsidized, nonvolumetric pricing of the electricity used to pump groundwater is politically entrenched and often blamed for groundwater depletion. Are there politically feasible ways to introduce incentives for conservation? We worked with a state government to design and test an alternative, voluntary approach, that invites farmers to install electricity meters and receive compensation for every unit they "save." Interest in participation was high, leading to an unprecedented voluntary shift to meter-based billing, but we found no impacts on water usage. These results provide some of the first empirical evidence on the effect of incentives on water use in India, and we discuss the extent to which they are informative about other policy tools, such as full pricing.

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Section: Discussionsupporting

confidence: 66%

Can Electricity Pricing Save India’s Groundwater? Field Evidence from a Novel Policy Mechanism in Gujarat

Fishman¹,

Lall²,

Modi³

et al. 2016

Journal of the Association of Environmental and Resource Econom

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show abstract

“…Last, these markets help the society by minimizing investments in groundwater due to availability of groundwater in the water market. Banerji et al (2012) find that, in contrast to earlier literature, the observed water trades result in efficient water allocation across farms. Acharyya (2012) suggests changes in the existing institutions of irrigation in India for generating efficiency and proper groundwater irrigation management.…”

Section: Review Of Literaturecontrasting

confidence: 99%

“…Somanathan and Ravindranath (2006) estimate marginal values of water and its elasticity of demand using data on water transactions in a watershed in southern India. Banerji, Meenakshi and Khanna (2012) show that a combination of water rationing and village-level mechanism of water sales can lead to a great misallocation of water across plots and result in large crop losses for plots irrigated from purchased water. Mukherji (2007b) discusses two case studies of alternative institutional arrangements, the kinship group-owned electric submersible tube well and private water market with price regulation by panchayat.…”

Section: Review Of Literaturementioning

confidence: 99%

Groundwater Market in West Bengal, India: Does it Display Monopoly Power?

Acharyya

Ghosh

Bhattacharya

2018

Studies in Microeconomics

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Based on village-level primary household survey in three districts of West Bengal, the present study tries to understand the groundwater market structure using the standard market theory. Comparing the internal rate of return of private investors on groundwater irrigation with past studies, it is found that although the degree of monopoly has gone down in the state over time, a certain element of monopoly still exists in the groundwater market. The estimates of price-tomarginal cost ratios and the Lerner index amply demonstrate the existence of high degree of monopoly in groundwater market. The study also shows that since banks give loans based on collateral, it is the large farmland owners who benefit from these bank loans for installation of electric submersibles for groundwater irrigation. Factors such as availability of rain and canal water, advance payment for water, distance of the land from the irrigation source, and maintenance and labour cost of water extraction mechanism also affect the price of water. As the groundwater extraction increases, it leads to lowering of the groundwater table leading to increasing cost for the water seller who in effect transfers the increasing cost to price leading to a rise in groundwater prices. This is a cause of concern not only for the small and marginal farmers but also for the sustainability of groundwater. Studies in Microeconomics6(1-2) 105-129

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“…For instance, Banerji et al (2012) provide an example of existence of efficient informal water markets and social institutions that exist in North Indian sugarcane farming communities. Besides a collective arrangement, there exist alternate arrangements in farming communities for mitigating water shortages and managing excess water demand.…”

Section: Model Outlinementioning

confidence: 99%

“…Besides a collective arrangement, there exist alternate arrangements in farming communities for mitigating water shortages and managing excess water demand. For instance, Banerji et al (2012) provide an example of existence of efficient informal water markets and social institutions that exist in North Indian sugarcane farming communities. These farmers buy and sell water based upon their spatial locations, and the price and the amount of water exchanged is determined using the N-player Nash bargaining game.…”

Section: Model Outlinementioning

confidence: 99%

Groundwater Management Through Collective Participation: Why Some Institutions Succeed and Others Fail?

Ranjan

2014

Annals of Public and Cooperative Economics

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In response to prolonged drought situations, water collectives have been promoted and exist in most water scarce farming regions to help them sustainably manage groundwater resources. However, the sustainability of the collectives itself is prone to groundwater depletion and to the risk of its irreversible future loss. The role of groundwater loss risk in determining the success or failure of groundwater collectives is inadequately understood. In this paper, a stylized dynamic optimization model of institutional participation is developed and results are analyzed for several cases of collective and non-collective farming behaviour. Results indicate that risk of groundwater loss may increase the tendency to free ride and exacerbate its depletion. This tendency may increase with a larger collective size when there are no deterrence mechanisms in place. However, when staying out threatens institutional stability, it is optimal for the profit maximizing farmer to join the collective and help with groundwater conservation.

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Social contracts, markets and efficiency: Groundwater irrigation in North India

Cited by 26 publications

References 16 publications

Can Electricity Pricing Save India’s Groundwater? Field Evidence from a Novel Policy Mechanism in Gujarat

Can Electricity Pricing Save India’s Groundwater? Field Evidence from a Novel Policy Mechanism in Gujarat

Groundwater Market in West Bengal, India: Does it Display Monopoly Power?

Groundwater Management Through Collective Participation: Why Some Institutions Succeed and Others Fail?

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