Watershed externalities, shifting cropping patterns and groundwater depletion in Indian semi-arid villages: The effect of alternative water pricing policies uri icon

abstract

  • Frequent droughtsand groundwater depletionare critical constraints toimprovingagricultural productivity in the semi-arid tropics. India has been promoting integrated watershed management in drought-prone areas to address these constraints. Watershed communities are being assisted to invest in groundwater re-charging facilities.While communities and the public bear such costs, individual farmers capture irrigation benefits. Groundwater is a free common property resource and land users hold de-facto use rights. This has accelerated private irrigation investments and depletion of aquifers resulting in iniquitous distribution of irrigation water. Power subsidies and negligible pumping costs aggravate the problem. These policy failuresand lowirrigationcosts to farmers are displacingwater-efficient crops in favor of water-intensive crops in water-scare areas. The paper reviews the village-level externalities that aggravate groundwater depletion and evaluates potential policy options to enhance local collective action in water management. Using 3SLS, an econometric crop-water productivity model is used to evaluate alternative water policy instruments. The results indicate that different types of water user charges can be introduced with modest consequences on profitability and farm incomes. If properly implemented and managed by the local communities, pro-poor policies could bring considerable sustainability benefits and also ensure enhanced equity in access to the resource

publication date

  • 2008
  • 2008