Might India’s use of groundwater be weakly sustainable?

In many parts of the world, groundwater is being extracted at rates that exceed natural renewal rates, leading many experts to conclude that groundwater mining is an unsustainable strategy for rural development. However, groundwater extraction could still be considered to be ‘weakly sustainable’ if it generates investments in man-made capital that offset the loss of natural ‘groundwater capital’ and enable income to be sustained even as the resource is depleted. In this paper, we examine whether the withdrawals of groundwater for irrigation in India have resulted in household-level investments in physical and human capital. Our empirical strategy compares villages in the same administrative units that overlie aquifers with different water storage capacities and, therefore, endowed with different levels of access to the resource. We find that greater access to the resource results in more irrigation, as expected, as well as higher asset wealth and educational attainment. The results suggest that deeming India’s irrigation-based rural development as unsustainable purely because of the decline in water tables may require reconsideration, provided that human capital is used to productively shift income from farm to off-farm sources.