This policy brief is based on SANDEE working paper no. 19-06, "Groundwater irrigation in North India : institutions and markets"In South Asia concerns about water scarcity have been mounting for some time, particularly in rural areas where food productivity critically depends on irrigation. Sustainable water consumption is therefore a key development goal, otherwise any strategy that aims to guarantee food security or tackle rural poverty will ultimately fail. This is, however, a particularly big challenge as there are many factors that influence water supply and demand; this means that it is often difficult to decide what strategic approach should be taken to make sure that water sources are used efficiently and sustainably

Banerji, A.

Khanna, Gauri

Meenakshi, J.V.

International Development Research Centre: IDRC Digital Library

Number 18-07, February 2007In South Asia concerns about water scarcity havebeen mounting for some time, particularly in ruralareas where food productivity critically depends onirrigation. Sustainable water consumption istherefore a key development goal, otherwise anystrategy that aims to guarantee food security ortackle rural poverty will ultimately fail. This is,however, a particularly big challenge as there aremany factors that influence water supply anddemand; this means that it is often difficult to decidewhat strategic approach should be taken to makesure that water sources are used efficiently andsustainably.A new SANDEE study from India, has investigated the impact of waterpricing, institutions and unreliability of power supply on crop output ofthe small-scale farmers in Western Uttar Pradesh. The study finds thatwater supply, farm productivity and electricity supply are all interlinked.It suggests an economic strategy that will provide farmers with adependable supply of electricity to drive irrigation pumps and a pricingmechanism that will help ensure that water is used sustainably.The present system of erratic power supply limits irrigation. One wouldexpect the limited water supply to be inefficiently favoring farmerswho irrigate using their own pumps, over those who buy water.Surprisingly, the study finds this is not the case — water allocation isefficient across farmers and plots. Farmers seem to have evolved socialinstitutions that govern irrigation efficiently, subject to the poor electricitysupply. Nevertheless, reliable electricity supply can increase output by8-10%.  The current electricity pricing involves a flat fee unrelated toquantum of electricity used; a poor incentive to supply electricity. Thestudy shows that a unit-based pricing system with reasonable ratescan incentivise the power supplier to supply adequate power, andincrease farmers’ profits net of additional power payments. This alonewill not solve the problem of water overuse. In order to reduce wateruse to sustainable levels over time, a possible market-based strategycould be to markup the unit electricity charge by about 15%.This policy brief is based on SANDEE working paperNo. 19-06, ‘Groundwater Irrigation in North India:Institutions and Markets’ by A.Banerji, J.V.Meenakshi and Gauri Khanna from the Centre forDevelopment Economics at the Delhi School ofEconomics. The full report is available atwww.sandeeonline.orgGround Water Irrigation and Sustainability –Water Markets, Institutions and Power Supplyin Northern IndiaTHE IRRIGATIONCHALLENGEWater scarcity is a huge concernin rural India, where 80 percent ofthe country’s water use occurs. Thisstudy is based in Tabelagarhi villagein the state of Uttar Pradesh.  Here,the popularity of water intensivecrops, such as paddy andsugarcane, is responsible fordepleting groundwater tables.Overexploitation of groundwaterresources raises concerns aboutthe future sustainability ofagriculture. It is therefore becomingincreasingly important that anygroundwater is used efficiently. Towork out how this can be done theresearchers look at the institutionsthat govern water allocation. Theyassess how well these institutionsperform and suggest how water usecan be improved in terms ofefficiency and sustainability.Tabelagarhi is located in thesugarcane belt of Western UttarPradesh and faces many of the keydevelopment issues common tothe region. In particular villagerspredominantly use groundwaterdrawn from tube wells for irrigation.A low and declining water tablemakes it uneconomical to useSANDEE Policy BriefTabelagarhi has 165 households that cultivate sugarcane. Sugarcaneyields more than one harvest after a sowing; after the first harvest, thecrop is known as rattoon sugarcane (as opposed to freshly-sown or plant-cane). Sugarcane sowing takes place in April-May, and harvesting isbetween February and April. Rattoon sugarcane, on the other hand, isharvested between late October and January. In this region, the first yieldis lower than from the rattoon sugarcane. Most farmers typically haveplots of both crops in the field.Sugarcane is a water-intensive crop requiring one irrigation before sowing,and regular irrigations thereafter. Conversations with experts and farmersat the site indicate that pre-monsoon irrigations are particularly crucialfor plant growth. In 2004, the monsoon was delayed, and there was norain in June and July. In this situation, the general opinion was that oneirrigation every 20 days was needed. Water from tube wells is transportedto plots largely via unlined channels. So there are seepage losses; butthese are restricted by the relative proximity of other tube wells.Tabelagarhi, as is the norm in many parts of India, is subject to erraticpower supply. For example, power can fluctuate from between 3-5 hoursa day to between 8-10 hours a day. As explained, for sugarcane, timelyirrigations early in the season are critical to crop growth; thus the lack ofregular electricity supply means that in summer months with no rain,tube wells need to be kept running flat out whenever power is available.INVESTIGATING GROUNDWATER USEThe study first looks at how efficiently groundwater in Tabelagarhi isallocated among the farm plots. Although there is some inefficiency,mathematical simulations show that re-allocation of water may notlead to significant productivity gains. One can infer from this, andthrough direct observation, a form of social contract at work, that helpsto allocate water efficiently. Villagers work together informally to fixwater prices at the beginning of a growing season since they oftendouble up as buyers and sellers in the water market due to fragmentationof land. Given the fairly low water price and the relative shortage ofwater (due to paucity of electricity), tube well owners wanting to maximizeprofits from water sales could choose to sell little water, using most ofit on their own plots. It is remarkable that tube well owners actually donot try to maximize profits in this fashion. They sell substantial volumesof water even though it would make better economic sense to use thewater to boost the productivity of their own land. This is a striking findingthat stands in sharp contrast to much of the literature on this issue inSouth Asia. Many studies argue that tube well owners exercise somemonopoly power over water buyers, leading to inefficient water allocationand inequality.diesel to fuel the pumps that runthe wells. Electric pumps aretherefore used to draw water upfrom depths of over seventy feet ormore.  The region also suffers froman erratic and inadequateelectricity supply and consequentlyan erratic supply of irrigation water.Many farm plots, particularlysmaller ones, do not have tubewells. As a result, a lot of plots areirrigated using water purchasedfrom villagers who have tube wellson their farms.The study is based on a sample of73 tube wells and a survey of allthe plots serviced by these wells.These 326 plots belong to 105farmers. Three types of data areused: tube well-specific, plot-specific, and farm household-specific.  Plot-specific data is usedto estimate the demand forirrigation water, tube well data toestimate water supplycharacteristics, and householddata to identify how the farmersthemselves affect production.GROWING SUGARCANEIN TABELAGARHIVILLAGETabelagarhi village, the subject ofthis study, is in the Baghpat district,in the sugarcane belt of WesternUttar Pradesh. Sugarcane is one ofthe most water intensive cropswidely cultivated in North Indiaand, by and large, groundwater isthe only source of irrigation for cropsgrown in and around Tabelagarhi.The crop is therefore a major reasonwhy the water table in this area haswitnessed a steady decline over thelast few decades.SANDEE Policy BriefThe social contract in evidence in the Tabelagarhi region makes sense.Land holding in the region is fragmented and this means that practicallyall water sellers also have plots for which they themselves have to buywater. What a water seller loses by selling water ‘below value’ on his ownplot, he can make up by buying ‘cheap’ water from another supplier.Simulations also show that agricultural yields in the region would beabout 18% lower if tube well owners tried to maximize their individualeconomic profits (see Table ). As the Table shows most of this reductionwould come from a reduction in the yields of buyers of water. It is thoughtthat farmers in the region have been able to develop and implement thiseffective water allocation system, thanks to the relative social homogeneityof Tabelagarhi and surrounding villages.THE ELECTRICITYPROBLEMDespite the existence of the socialcontract system in and aroundTabelagarhi, it is clear that theregion’s erratic and inadequatepower supply does have asignificant impact on agriculturalproductivity. There is strongevidence that many farmers receivean inadequate water supply andthat water is, in effect, rationed.This is shown by the fact that whenthe marginal value product of wateron a plot is compared with the priceof water (if the plot uses purchasedwater) or the marginal cost of waterextraction (if the plot has a tubewell on it), then the marginal valueproduct is, on average, twice thecost of water supply. In other words,farmers could increase profits byusing more water (if it wasavailable).This water rationing has manyimplications. Many key landpreparation decisions are made inthe first few summer months,before farmers get to know howpower availability will affect irrigationover the season. This uncertaintymeans that many farmers do notapply optimal levels of fertilizers andother agricultural inputs. If farmerscould be confident about power andwater supply they would have theconfidence to use moreagricultural inputs which couldincrease yield by 8%-10% onaverage.TABLE : A COMPARISON OF CURRENT YIELDS WITHPROJECTED YIELD IF EACH TUBEWELL OWNER ACTEDAS A PROFIT MAXIMISER (PER BIGHA)Plot Category Sample Yield Projected (Simulated) YieldAll Plots 59.27 48.25Plots with Single-Owner TW 60.36 61.95Plots with Joint-Owner TW 59.77 61.10Plots that bought water 53.41 16.36SANDEE | P.O.Box 8975 EPC-1056 | Kathmandu, NepalTel: 977-1-552 8761, 552 6391 | Fax: 977-1-553 6786E-mail: info@sandeeonline.orgWebsite: www.sandeeonline.orgSANDEE SPONSORSSANDEE Policy BriefThis policy brief is an output of a re-search project funded by SANDEE. Theview’s expressed here are not neces-sarily those of SANDEE’s sponsors.SANDEEThe South Asian Network forDevelopment and EnvironmentalEconomics (SANDEE) is a regionalnetwork that seeks to bring togetheranalysts from the different countriesin South Asia to address theirdevelopment-environment problems.Its mission is to strengthen thecapacity of individuals andinstitutions in South Asia to undertakeresearch on the inter-linkages amongeconomic development, poverty, andenvironmental change, and, todisseminate practical information thatcan be applied to developmentpolicies. SANDEE’s activities coverBangladesh, Bhutan, Nepal, India,Pakistan and Sri Lanka.SANDEE’s Policy Brief Series seek to in-form a wide and general audience aboutresearch and policy f indings fromSANDEE studies.AuthorA. BanerjiJ.V. MeenakshiGauri Khanna EditorRufus Bellamy Series EditorPranab MukhopadhyaySTABILISING POWER SUPPLYIn Tabelagarhi, farmers pay a flat annual charge (based on the horsepowerof their pumps) in return for the right to use as much power as theyrequire. This gives no incentive to the power provider (here, the StateElectricity Board) to provide adequate power. The water rationing in theTabelagarhi region is therefore symptomatic of the pan-Indian problemof poor power infrastructure, and a lack of good incentives to produceand supply adequate power. If power prices were based on the amount ofelectricity that farmers use, it would give more incentive to the powerproducer to supply adequate, reliable power. If instead of a flat charge, aunit-pricing mechanism at reasonable levels was followed, it wouldimprove irrigation supply and yields could go up by as much as tenpercent. Increased productivity would pay for the higher irrigation coststhat farmers might have to bear due to higher power prices.This scenario obviously leaves the challenge of sustainability unanswered.With an improved electricity supply and electricity unit costs set at areasonable level, irrigation volumes will continue to seriously deplete thewater table. It is clear that with the speed of growth in the region, traditionalrights of water use are proving inadequate as a mechanism to governwater use, since individual farmers are ignoring the negative impact theiractions have on the communal water resource. As none of the standardsuggestions for water conservation (such as water pricing) have beentried in the region, there is clearly a need for more research.MAKING WATER USE SUSTAINABLEIncreasing the price of electricity supplied to farmers may be one possibleway forward. This study suggests that an electricity price marked up about15% over the unit cost of electricity may reduce farmers’ water extractionto a socially optimal level. The resulting decrease in farmers’ incomescould, in principle, be compensated through lump sum transfers.The implementation of such a proposal will, unsurprisingly, be problematic.The local power provider lacks credibility and, while it is likely thatsugarcane cultivation in the study area will be profitable even withsubstantially higher energy costs, this may not be true for all parts of thesugarcane belt. Deeper structural changes, such as allowing competitionbetween multiple power providers, may be the ultimate answer, but thiswould require a huge regime change. Despite these significant challenges,it is important to forge ahead, perhaps with a few experiments and morecareful and broader studies, because the water crisis has to be addressed.

Ground water irrigation and sustainability : water markets, institutions and power supply in Northern India

https://idl-bnc-idrc.dspacedirect.org/bitstream/10625/38939/1/128298.pdf

Ground water irrigation and sustainability : water markets, institutions and power supply in Northern India

Abstract

Similar works

Full text

Available Versions

International Development Research Centre: IDRC Digital Library