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Social Contracts, Markets And Efficiency -- Groundwater Irrigation In North India

Author

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  • Abhijit Banerji

    (Department of Economics, Delhi School of Economics, Delhi, India)

  • Gauri Khanna

    (World Health Organization, Geneva)

  • J. V. Meenakshi

    (Department of Economics, Delhi School of Economics, Delhi, India)

Abstract

This paper uses primary data to analyze the institutions and informal markets that govern groundwater allocation in the principal sugarcane belt of North India. In contrast to earlier literature, we find that the observed water trades result in efficient water allocation across farms. We interpret this and other stylized facts in terms of a simple bargaining model with limited inter-player transfers. Poor functioning of the power sector leads to reduced pumping and a water supply constraint. Simulations show that power supply reform can significantly increase farm yields, be financed out of the increased farm profits, and provide an instrument to use for attaining intertemporal efficiency in water allocation.

Suggested Citation

  • Abhijit Banerji & Gauri Khanna & J. V. Meenakshi, 2010. "Social Contracts, Markets And Efficiency -- Groundwater Irrigation In North India," Working papers 183, Centre for Development Economics, Delhi School of Economics.
    • Handle: RePEc:cde:cdewps:183
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    Cited by:

    1. Watto, Muhammad, 2013. "Measuring Groundwater Irrigation Efficiency in Pakistan: A DEA Approach Using the Sub-vector and Slack-based Models," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152204, Australian Agricultural and Resource Economics Society.
    2. Siwa Msangi & Sarah Ann Cline, 2016. "Improving Groundwater Management for Indian Agriculture: Assessing Tradeoffs Across Policy Instruments," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(03), pages 1-33, September.
    3. Khanna, Tarun M., 2022. "Using agricultural demand for reducing costs of renewable energy integration in India," Energy, Elsevier, vol. 254(PC).
    4. Disha Gupta, 2023. "Free power, irrigation, and groundwater depletion: Impact of farm electricity policy of Punjab, India," Agricultural Economics, International Association of Agricultural Economists, vol. 54(4), pages 515-541, July.
    5. Jayanath Ananda & Mohamed Aheeyar, 2020. "An evaluation of groundwater institutions in India: a property rights perspective," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 22(6), pages 5731-5749, August.
    6. Gine,Xavier & Jacoby,Hanan G. & Gine,Xavier & Jacoby,Hanan G., 2016. "Markets, contracts, and uncertainty in a groundwater economy," Policy Research Working Paper Series 7694, The World Bank.
    7. Michler, Jeffrey D. & Wu, Steven Y., 2020. "Governance and contract choice: Theory and evidence from groundwater irrigation markets," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 129-147.
    8. Rita Rani Chopra & Smruti Ranjan Behera, 2021. "Assessment of interstate dynamics of virtual water trade flows in primary crops production: Empirical evidence from India," Economics Bulletin, AccessEcon, vol. 41(3), pages 1860-1875.
    9. Michler, Jeffrey D. & Wu, Steven, 2013. "Contracting for Groundwater Irrigation:A Principal-Agent Based Approach to Determining Contract Effectiveness," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149437, Agricultural and Applied Economics Association.
    10. Cui, Yi & Du, Xiaodong & Ma, Jiujie, 2020. "Agricultural Water right reforms and Irrigation Water Demand: A Quasi-Natural Experiment in China," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304364, Agricultural and Applied Economics Association.
    11. Michler, Jeffrey D. & Balagtas, Joseph Valdes, 2013. "The Determinants of Rice Storage: Evidence from Rice Farmers in Bangladesh," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150267, Agricultural and Applied Economics Association.
    12. Vasilaky, Kathryn & Harou, Aurélie & Alfredo, Katherine & Kapur, Ishita, 2023. "What works for water conservation? Evidence from a field experiment in India," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    13. Achiransu Acharyya & Madhusudan Ghosh & Rabindra N. Bhattacharya, 2018. "Groundwater Market in West Bengal, India: Does it Display Monopoly Power?," Studies in Microeconomics, , vol. 6(1-2), pages 105-129, June.
    14. Ram RANJAN, 2014. "Groundwater Management Through Collective Participation: Why Some Institutions Succeed And Others Fail?," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(3), pages 427-452, September.
    15. Watto, Muhammad Arif & Mugera, Amin William, 2013. "Measuring Groundwater Irrigation Efficiency in Pakistan: A DEA Approach Using the Sub-vector and Slack-based Models," Working Papers 144943, University of Western Australia, School of Agricultural and Resource Economics.
    16. Gáfaro, Margarita & Mantilla, Cesar, 2021. "Environmental valuation using bargaining games: an application to water," OSF Preprints tcfyb, Center for Open Science.
    17. Ram Fishman & Upmanu Lall & Vijay Modi & Nikunj Parekh, 2016. "Can Electricity Pricing Save India’s Groundwater? Field Evidence from a Novel Policy Mechanism in Gujarat," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(4), pages 819-855.
    18. Zeyu Wang & Juqin Shen & Fuhua Sun & Zhaofang Zhang & Dandan Zhang & Yizhen Jia & Kaize Zhang, 2019. "A Pricing Model for Groundwater Rights in Ningxia, China Based on the Fuzzy Mathematical Model," IJERPH, MDPI, vol. 16(12), pages 1-20, June.
    19. Reena Badiani-Magnusson & Katrina Jessoe, 2018. "Electricity Prices, Groundwater, and Agriculture: The Environmental and Agricultural Impacts of Electricity Subsidies in India," NBER Chapters, in: Agricultural Productivity and Producer Behavior, pages 157-183, National Bureau of Economic Research, Inc.
    20. Chong Dong & Hainan Wang & Wenjin Long & Jiujie Ma & Yi Cui, 2023. "Can Agricultural Cooperatives Promote Chinese Farmers’ Adoption of Green Technologies?," IJERPH, MDPI, vol. 20(5), pages 1-17, February.

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    More about this item

    Keywords

    water markets; market structure; water production function.;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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