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Groundwater Markets in India: A Legal and Institutional Perspective

Author

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  • R. Maria Saleth

    (Institute of Economic Growth)

Abstract

Impressed by the superficial efficiency and equity benefits, a number of research studies have projected the groundwater markets as an alternative institutional option for better groundwater utilisation and management. Such an euphoric projection, however, misses not only the legal vacuum within which the currently observed water markets operate but also their fundamental negative ecological, equity, and efficiency effects. Taking a fresh look at the water marketing activities from a legal, ethical, and institutional perspective, this paper tries to show that under the current legal regimes governing groundwater resources in India, water markets are: (i) extralegal and inconsistent with any ethically grounded equity notions, (ii) instruments of rent-seeking behavior contributing to widespread aquifer depletion, and (iii) transitional as rental markets for irrigation assets (i.e., wells/pumpsets) emerge when water marketing ceases with the dissipation of the Ricardian rent due to intense competition among water sellers. Finally, the paper identifies the legal and institutional conditions under which groundwater markets could have their maximum efficiency and equity benefits that too without violating the sustainability requirements of the groundwater resource system.

Suggested Citation

  • R. Maria Saleth, 1994. "Groundwater Markets in India: A Legal and Institutional Perspective," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 29(2), pages 157-176, July.
    • Handle: RePEc:dse:indecr:v:29:y:1994:i:2:p:157-176
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    Cited by:

    1. M. Dinesh Kumar & R. Maria Saleth, 2018. "Inequality in the Indian Water Sector: Challenges and Policy Options," Indian Journal of Human Development, , vol. 12(2), pages 265-281, August.
    2. World Bank, 2010. "Deep Wells and Prudence : Towards Pragmatic Action for Addressing Groundwater Overexploitation in India," World Bank Publications - Reports 2835, The World Bank Group.
    3. Palanisami, Kuppannan, 2009. "Water markets as a demand management option: potentials, problems and prospects," Book Chapters,, International Water Management Institute.
    4. Sarbani Mukherjee, 2007. "Groundwater for Agricultural Use in India: An Institutional Perspective," Working Papers 187, Institute for Social and Economic Change, Bangalore.
    5. Kuppannan, Palanisami, 2009. "Water markets as a demand management option: potentials, problems and prospects," IWMI Books, Reports H042160, International Water Management Institute.

    More about this item

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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