Irrigation Investments and Groundwater Depletion in Indian Semi-Arid Villages:The Effect of Alternative Water Pricing Regimes. Working Paper Series no.17 Socio Economic Policy uri icon


  • Factors such as increasing population, scarcity of productive land and declining farm sizes in India have prompted the intensification of land use through increased use of fertilizers, pesticides, improved seeds and irrigation investments. This has contributed to increasing productivity of land and cropping intensities. The Green Revolution that transformed India from a food-deficit to a food-surplus nation took place in the more favorable areas with better access to markets and irrigation. However, frequent droughts and water scarcity are crucial barriers to improving agricultural productivity and livelihoods in the rainfed tropics of India. The watershed management approach has been promoted as a major ruraldevelopment strategy for the drought-prone areas. Watershed communities have invested in groundwater rechargingfacilities to improve availability of water for irrigation. While such costs are borne by the local communities and the public, individual farmers freely capture the irrigation benefits. Groundwater is a free resource and de-facto rights are in the hands of landowners. This has increased private irrigation investments and depletion of open access aquifers in many dryland areas. Power subsidies and very low pumping costs aggravate the problem. The increased investment in irrigation has also encouraged a shift in cropping patterns towards water-intensive irrigated crops, a practice that may not be sustainable in water-scarce areas. This paper provides some insights into the village-level externalities that aggravate groundwaterdepletion and the different policy instruments that may be used to enhance collective action in community watermanagement. An econometric land productivity model is used to evaluate alternative water pricing instruments for reducing the pressure on groundwater resources. The results indicate that water user charges can be introduced without serious consequences on the profitability of smallholder production activities. If properly implemented and managed by the local communities, this could bring considerable economic and environmental benefits

publication date

  • 2003