GROUNDWATER MARKETS IN IRRIGATION - CONCEPTS AND EMPIRICAL EVIDENCES
S.C. DEEPAK
24th April 2004
Ground water irrigation accounts for more than 50 per cent of the net irrigated area in India and contributes more than 50 per cent of the country's total agricultural production from irrigated area. Besides irrigation, ground water is also an important source of potable water both in urban and in rural areas. Of the 47.5 million hectare meters (mham) of India's known ground water potential, very likely some 18 odd mham is currently used to irrigate about 28 million hectares of land at the rate of 0.60 to 0.65 meter per ha, the ultimate irrigation potential with ground water may well be around 70-80 mha.
Ground water market has been used to described a localized, village level informal arrangement through which owners of water extraction mechanisms (WEM) sells irrigation service to other members of the community. These informal markets have increased both the availability of water and the reliability of supply and facilitated a more socially equitable out come of irrigated farming within the community. Although these groundwater markets are localized in nature and still in a process of transition, they have significant implications for the efficient and equitable use of both groundwater and irrigation assets. Understandably, the area under the influence of groundwater markets can vary both across regions as well as over time depending upon a combination of factors such as rainfall, groundwater supply position, availability and cost of energy resources, cropping pattern, etc. in any event of area being irrigated through ground water markets is quite substantial especially in the water scarce pockets of states like Uttar Pradesh, Gujarat, Andhra Pradesh and Tamil Nadu.
Regarding the organizational character of groundwater markets, while the groundwater markets in parts of Gujarat have taken almost an agribusiness proportion with cash based commercial transactions involving water rent as well as extraction of unpaid farm services from the buyers. On the other hand, groundwater markets in the relatively abundant indo-gangetic regions appear to fall somewhere in between these two extremes displaying rather a mute form of commercial character.
The nature and scale of the social effects of water markets depends on (1) The extent to which water markets have developed, (2) The efficiency of market transactions, (3) The fit between the groundwater endowment of a region and system of appropriation implied by water markets.
Conclusions and policy implications:
These also raise social concerns. Groundwater being an open access resource and electricity cost often heavily subsidized, hence the ability to sell water encourages sellers to keep pumping water to maximize the profit from the investment in infrastructure. This results in declining groundwater tables and there by increased pumping costs for all pumpers.
Defining clear property rights to groundwater resource use. At present, there is no single regulation in India defining property rights to groundwater resource. in the absence of clear property rights to groundwater the sustainability of groundwater resource cannot be achieved.
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