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

  • 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)

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.

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Paper provided by Centre for Development Economics, Delhi School of Economics in its series Working papers with number 183.

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Length: 39 pages
Date of creation: Apr 2010
Date of revision:
Handle: RePEc:cde:cdewps:183
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  4. Srivastava, S.K. & Kumar, Ranjit & Singh, R.P., 2009. "Extent of Groundwater Extraction and Irrigation Efficiency on Farms under Different Water-market Regimes in Central Uttar Pradesh," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 22(1).
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  7. Mukherji, Aditi, 2007. "The energy-irrigation nexus and its impact on groundwater markets in eastern Indo-Gangetic basin: Evidence from West Bengal, India," Energy Policy, Elsevier, vol. 35(12), pages 6413-6430, December.
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  10. Meinzen-Dick, Ruth Suseela, 1996. "Groundwater markets in Pakistan: participation and productivity," Research reports 105, International Food Policy Research Institute (IFPRI).
  11. Schoengold, Karina & Zilberman, David, 2007. "The Economics of Water, Irrigation, and Development," Handbook of Agricultural Economics, Elsevier.
  12. Jacoby, Hanan G. & Murgai, Rinku & Rehman, Saeed Ur, 2001. "Monopoly power and distribution in fragmented markets : the case of groundwater," Policy Research Working Paper Series 2628, The World Bank.
  13. Krishna, Vijay & Serrano, Roberto, 1996. "Multilateral Bargaining," Review of Economic Studies, Wiley Blackwell, vol. 63(1), pages 61-80, January.
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  15. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
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