The economics of groundwater irrigation is one of the thrust areas of research in Natural Resource Economics as it has serious intra and inter generational equity implications in the hard rock areas of peninsular India fraught with poor recharge potential and due to lack of perennial sources of surface water. For this research, a grant of US $ 41,000 was given by the Ford Foundation, to Dr M.G. Chandrakanth, Professor & Head, Department of Agricultural Economics, University of Agricultural Sciences, Bangalore, for the initial research proposal in 1994.

The objective of this study is to estimate the economics of groundwater irrigation especially when interactive effects of wells are present. Given the scanty rainfall (400 mm to 800 mm), sparse net work of rivers and canals and the absence of perennial rivers in the Deccan plateau, farmers are gambling on both rainwater and groundwater. In such circumstances, mushrooming of irrigation wells and increasing number of wells per unit volume of groundwater are imminent. Beyond certain thresholds, the interactive effects among irrigation wells lead to physical and/or economic scarcity of groundwater. This leads to increasing probability of both initial and premature failure of wells. Such wells and inter alia the resulting externalities, inequities, coping mechanisms, shifts in crop patterns, repair costs due to supply of poor voltage electricity, influence of surface water bodies on groundwater recharge are the subject matter of this study spread over four dry agroclimatic zones (eastren, central, northern and southern) and one transitional (southern) agroclimatic zone of Karnataka State. Accordingly in this study, well failure is defined as a well that (i) goes dry or fails or (ii) loses its yield or (iii) requires deepening because of interactive effects of pumping in neighboring wells or new wells coming in, but not because of (a) low rainfall or (b) technical deficiency in locating, drilling, construction of wells, pump capacity and so on.

Research studies were initiated with the involvement of post graduate students of the Department of Agricultural Economics under the overall guidance and supervision of Dr MG Chandrakanth (Table 1).

Table 1: Students of the Department of Agricultural Economics involved in research in the research project sponsored by the Ford Foundation

Name of the student

Agro climatic zone, taluk and district

Title of the research study


1. B Shivakumaraswamy

M.Sc (Agri), 1995


2. M.S. Shyamasundar

Ph.D, 1996



3. K.M. Sathisha

M.Sc (Agri), 1997



4. G. Basavaraj

M.Sc (Agri), 1998


5. Sushma Adya

M.Sc (Agri), 1998



6. K.K. Ananda

Systems Analyst, 1998

Southern Dry Zone

Chamarajanagar taluk,

Chamarajanagar district

Northern Dry Zone

Athani taluk, Belgaum district




 Central Dry Zone,

Madhugiri taluk, Tumkur Dt



Southern Transitional Zone, Channagiri Taluk, Shimoga Dt



Eastern Dry Zone, Malur taluk, Kolar Dt



Eastern Dry Zone

Devanahalli Tq, Bangalore Dt

Economic implications of unsustainable use of groundwater in hard rock areas of Karnataka 


Interplay of markets, externalities, institutions and equity in groundwater development - An economic study in the hard rock areas of Karnataka


 Resource economics study of valuation of well interference in Central Dry Zone of Karnataka


Groundwater scarcity and coping strategies in Channagiri taluk of Shimoga dt - An economic analysis


Scarcity of groundwater for irrigation: Economics of coping mechanisms in hard rock areas


Inequity in access to groundwater in irrigation tank command

In addition, the following students benefitted by way of the research and academic support from the Ford grant:

Name of the researcher

Agroclimatic zone

Title of the study

1. M. Gireesh

M.Sc(Agri), 1996



2. A.H. Suvarnakumar


Eastern Dry Zone, Mutur, Kolar district



Central Dry Zone, Madhugiri tq, Tumkur dt

Economics of tank desiltation


Groundwater markets - an economic study



1. SOUTHERN DRY ZONE - Chamarajanagar taluk

The taluk is a drought prone area declared by DPAP authorities. The rainfall is 668 mm. The taluk has diverse soil types namely deep black red and read loamy. Chamarajanagar taluk has 76 million cubic meters of utilizable groundwater for irrigation. There are 116 irrigation wells per million cubic meter of groundwater in this taluk. The crop pattern on groundwater farms is dominated by sugarcane, mulberry, coconut, paddy and turmeric. The focus of research in this zone is on adoption of coping mechanisms and the loss suffered by farmers due to irregular power supply, apart from the resource economics of groundwater use. In the sample studied, 54 percent of wells were functioning. Out of these functioning wells, dug cum borewells and surface borewells formed equal proportion. The average age of the irrigation wells is around seven years.

Policy Implications

  1. The well interference reduces the net income per well to the tune of 15 percent (Rs. 4446 per well) in areas fraught with high interference.

  2. Instability of electricity supply results in an annual loss of Rs. 1,319 per dug cum bore well in high well interference situation.

  3. The negative externality due to well interference is 54 percent higher in high well interference areas (Rs. 960 per dug cum bore well) when compared with low well interference areas.

  4. The cost of coping mechanisms due to negative externality is 13 percent (Rs. 10,344) higher in high interference areas than in low well interference areas.


Athani taluk of this zone is a chronically drought area declared by the Drought Prone Area Program authorities of the Government of India. The hydrogeology of this taluk is characterized by consolidated and effusive formation of mesozoic age with flows of Deccan trap and alluvial patches. The climate is semi arid and receives an average rainfall of 543 mm. Athani has 15,000 dug wells (98 percent of all wells) and 300 borewells (2 percent). Thus, groundwater is mainly extracted from dug wells. On groundwater farms, during kharif, the major crop is Govina Jola (local maize). Minor crops are hybrid jowar, bajra, wheat and mulberry. In rabi season, major crop is wheat, and minor crops are white jowar and Bengal gram. In summer, no crop is grown by a majority of the farmers. A few farmers who have wells yielding water in summer, grow sugarcane and also have mulberry. The groundwater use varies from 3 to 4 acre inches per farm with a gross area irrigated of 1.5 to 3 acres. Athani has 125 million cubic meters of utilizable groundwater for irrigation. There are 154 irrigation wells per million cubic meter of groundwater. The conspicuous feature of groundwater irrigation in the domination of dug wells, and the average life of dug wells is around 30 years. The focus of this study is the interplay of markets, externalities, institutions and equity in groundwater development.

Policy Implications

  1. Crop patterns in Athani, are sustainable and levels of groundwater use are less than optimum. Due to inherent scarcity of groundwater, a majority of the groundwater farmers are growing crops (like local maize (Govina Jola in vernacular)) which are water saving, using modest volumes of water between 3.23 acre inches (on one well farms with a gross irrigated area of 2.15 acres) to 20 acre inches (on deepened dug well and additional well farms with a gross irrigated area of 4.74 acres). These levels of water use are far below the economic optimum levels of groundwater use.

  2. The access to term credit be considerably liberalized in areas concentrated by dug wells supporting low water food crops as the well interference externality is non existent. Such a provision of term loans to farmers for promoting well irrigation will address the equity concerns. Athani is historically a drought prone area and also declared as a 'grey' area with regard to groundwater. However, declaration of Athani as 'grey' taluk imposes rationing of term loans with regard to construction of dug wells. Instead the taluk be declared as 'white' area so that term loans are made available for dug wells to enable resource poor farmers to benefit from well irrigation. In addition, Athani, where dug well irrigation predominates, deserves NABARD refinance for well irrigation compared with other taluks where borewells are mining groundwater.

3. CENTRAL DRY ZONE - Madhugiri taluk

Madhugiri receives 600 mm of rainfall. The temperature ranges from 10 degrees to 40 degrees celsius. Though 67 percent of wells in the taluk are open wells and the rest are bore wells, in the sample studied, 77 percent of the working wells are borewells. Irrigation in Madhugiri is dominated by borewells. The average age of borewell is seven years. Groundwater occurs in unconfined conditions in clayey, granular, weathered materials and joints, fissures and other openings in unaltered rocks. The soil type varies from red fine loamy to red sandy loam. The taluk has 147 million cubic meters of groundwater. There are 156 irrigation wells per million cubic meter of groundwater. Farmers cultivate paddy in Kharif followed by groundnut among seasonal crops. In addition, they cultivate arecanut and mulberry. The groundwater use varies from 21 to 37 acre inches per farm with a gross area irrigated of 2 acres and 5.7 acres in areas where is there is no recharge from tanks. In areas where there is recharge from tanks, the water use is 44 acre inches on a gross area irrigated of 8.5 acres. The focus of this study is on the influence of surface water bodies on groundwater recharge, groundwater markets and electricity use to lift groundwater and its cost.

Policy implications

  1. Cultivating paddy on a commercial scale using groundwater, in such groundwater scarce areas such as Madhugiri be strongly discouraged to enable sustainable use of groundwater.

  2. Irrigation tanks which facilitate in groundwater recharge significantly reduce the negative externality to the extent of Rs. 25,000 per farm of around five acres of gross irrigated area.

  3. Term loans for well irrigation be channelized to small and marginal farmers in low well interference villages as the cost of a functional well is around Rs. 60,000 when compared with Rs. 1,66,000 in high well interference villages.

  4. Economic loss due to cumulative well interference in the case of small farmers in high well interference villages is Rs. 5814 per acre of gross irrigated area. More importantly, this loss can be reduced to an extent of 84 percent (Rs. 918), if the groundwater recharge is facilitated by an irrigation tank in the vicinity.

Implication on Pricing Electricity to lift Groundwater for irrigation

Pricing electricity for lifting groundwater would not facilitate sustainable use of groundwater. Even if electricity to lift groundwater is priced, the cost of electricity used in the total cost of cultivation will be modest. The electricity cost to lift one acre inch of groundwater is estimated to be Rs. 20 per acre inch (Source: data from a coconut farm in Tiptur, which used 4367 KWHs to lift 104 acre inches of water in 1995-96) at the rate of 50 paise per KWH. Even considering the most water intensive crop of paddy which uses 50 acre inches per acre, and considering only the electricity cost, the total cost of electricity will be Rs. 1000. If the cost of cultivation of paddy without electricity cost is Rs. 6000, an addition of Rs. 1000 forms around 14 percent. Hence, given the better relative prices of paddy (output) in relation to electricity (input), there are no compelling reasons to infer that electricity pricing will substantially influence groundwater use on farms. However, for reasons of fiscal probity and to generate revenues for providing good infrastructural facilities in rural electrification, it is essential to meter the electricity use and price it, progressively on slab basis (for instance up to 3000 KWHs - 50 paise per KWH, 3001 to 4000 KWHs, 75 paise per KWH, 4001 to 5000 KWH, 1 Rupee per KWH and so on), by educating farmers and other actors.


Channagiri in Shimoga district receives 800 mm of rainfall. The taluk has the largest irrigation tank (Shantisagara) in the world. The utilizable groundwater for irrigation is 107 million cubic meters. There are 56 wells per million cubic meter of groundwater. The crop pattern is dominated by arecanut. In the sample studied, 98 percent of all the working wells are bore wells. The age of the working borewells is around 2 years. The focus of the study is on the use of groundwater saving technology and the influence of irrigation tank on groundwater recharge in an area where commercial crop like arecanut is dominant.

Policy Implications

  1. In areas of high well interference, eventhough groundwater saving technologies (like drip irrigation for perennial crops like arecanut) are not adopted, due to the influence of irrigation tanks in augmenting groundwater recharge, the net returns per acre increases by Rs. 20,918.

  2. As a consequence of the improved water saving technology, the drip irrigation farms use (9 acre inches per acre =) 33 percent of groundwater used by flow irrigation farms (27 acre inches per acre) for arecanut crop.

  3. Due to the influence of irrigation tank on groundwater recharge, the cost of groundwater gets reduced by Rs. 2091 per acre inch (from Rs. 2509 to Rs. 418).


Malur taluk receives an annual rainfall of 733 mm. Lateritic masses occurring as irregularly distributed patches in the form of flat hills are the geological formations. Utilizable groundwater for irrigation is estimated to be 27 Million cubic meters. Malur taluk has 397 irrigation wells per million cubic meter of groundwater, the second largest in Karnataka state. In the sample of farmers studied, 89 percent of the total working wells are borewells. Here 80 percent of the gross irrigated area is dedicated to grow water intensive crops like tomato, potato, rose and paddy. In the sample studied, 78 percent of the working wells are borewells. The age of the working borewells in tank command area is around 8 years.

Policy Implications

  1. Small farmers can realize a net return of Rs. 3067 per acre of gross area irrigated as an additional income (over and above Rs. 6970) if the village irrigation tank is desilted and aids in groundwater recharge.

  2. Savings in the cost of irrigation to the extent of Rs. 107 per acre inch of groundwater is possible due to tank desiltation - groundwater recharge process, even with the existence of high well interference.

  3. In areas of high well interference which have irrigation tank in proximity and where groundwater recharge due to desiltation is apparent, farmers have realized rich benefits from desiltation of irrigation tank in terms of longer lives of irrigation wells and larger yields of groundwater.

  4. Even after internalizing the desiltation cost (per acre of Rs. 6000; per well of Rs. 4000) and the groundwater irrigation cost (per acre of Rs. 5956; per well of Rs. 6006), positive net returns (to the extent of Rs. 2650 per acre; Rs. 8031 per well) can still be realized.



Considering the access to groundwater the farmers were classified into ten groups of equal size based on the descending order of magnitude of groundwater use per farm. Around 70 percent of the groundwater in High Well Interference Village and Low Well Interference Village were used by the top thirty percent of the farmers, which is an indicator of the huge inequity in access to groundwater due to interference of irrigation wells. Considering the gross area irrigated on farms, the top thirty percent of the farmers in both High Well Interference Village and Low Well Interference Village possessed around 50 percent of the gross irrigated area. Taking into account the net returns realized, 80 percent of the net returns were cornered by the top 30 thirty percent of the farmers. These results are the broad generalizations of the level of inequity in access to groundwater and the resulting net returns.


In High Well Interference Villages, the influence of irrigation tank in recharging groundwater as reflected in terms of irrigation cost is conspicuous across both water intensive and water saving crops. Considering paddy crop, the irrigation cost in non tank command is 85 percent of the total cost of cultivation, while that in tank command is around 40 percent. In ragi crop, the irrigation cost is around 73 percent in non tank command area and 48 percent in tank command.


  1. Recommendations relating to sustainable use, wise use and conservation of groundwater should be at three levels: (i) the state level, (ii) agroclimatic zone level and (iii) farm level.

  2. Having internalized the negative externality in groundwater use, the cost of groundwater varies from Rs. 100 to Rs. 3000 per acre inch in the dry and transitional agroclimatic zones of Karnataka. This shows that farmers in these zones who are exposed to well interference externality are actually deriving the benefit to the above extent depending upon the volume of extraction of groundwater. Further, the cost of cultivation of groundwater irrigated crops should accordingly include the cost of irrigation..

  3. Even if electricity to lift groundwater is priced (whether on pro rata or on flat rate basis), it would not substantially influence the groundwater use on farms as the cost of lifting an acre inch of groundwater is around Rs. 20. However, for reasons of fiscal probity and to generate revenues for providing good infrastructural facilities in rural electrification, it is essential to meter the electricity use and price it, by educating farmers and other actors in this regard.

  4. In order to optimally exploit groundwater, policies concerning groundwater should consider the role of surface water bodies like irrigation tanks, canals, reservoirs, watersheds. Workable programs and policies should be specific to each condition.

  5. Policies of isolation distance, credit supply, power pricing and subsidies to adopt water saving technologies are sine-quo-non for conservation of groundwater resources. There cannot be an uniform Isolation distance norm since the proximity to surface water bodies and groundwater recharge capacity can mask the effect of high density of irrigation wells.

  6. Cropping pattern plays a significant role in groundwater use and conservation. Hence irrigation literacy should be promoted among farmers towards sustainable use of the economically scarce groundwater.