Socio-economic Aspects of Groundwater Use in India

1. Socio-economic Aspects of Groundwater Use in India M. Dinesh Kumar Institute for Resource Analysis and Policy, Hyderabad Email: dinesh@irapindia.org

2. Context • Several studies in the past on both geo-hydrological aspects and socio-economics aspects; but many limitations. • Analysis of macro hydrology of groundwater availability and demand completely ignores the socio-economic system and other factors affecting the use of groundwater • Micro level geo-hydrological studies have problems of replicability • Studies on water markets: some very rigorous; but have limited applications of the theoretical propositions in terms of geographical coverage • Some are extensive; but fail to capture the complex physical, social, economic and ecological factors that explain the market behaviour

3. Aquifers in India

4. Groundwater Uses in India • Major source of irrigation in arid and semi arid regions of India • Nearly 80 per cent of the rural water supplies • High dependence in alluvial areas • Lower dependence in hard rock areas • Nearly 50 per cent of the urban water supplies • Industrial uses

5. Can the well irrigation miracle last? • The number of wells has increased over the years, more so in hard rock areas • The characteristics of wells have changed over the years: • Open wells to dug-cum-bore wells & tube wells in alluvium • Open wells to deep bore wells • The area under well irrigation has grown remarkably over the past 3 decades, and has taken over surface irrigation; but growth declined in recent past • Intensity of groundwater use is still very low in water abundant areas

6. What does increasing well density say? Table 1: Reduction in Average Command Area of Wells over Time

7. Does high well density mean intensive groundwater use?

8. Does Population Drive Well density?

9. What Drives Well Density? • Average rainfall--negative • Reference evapo-transpiration--positive • Well yields--negative • Ratio of net irrigated area by gross cropped area--positive • Average renewable recharge rates--positive • No. of land holdings--positive • Average no. of fragments --negative • Average investment in wells—positive • Population density--positive

10. Is groundwater really over-exploited? • Official estimates show 21% of blocks critically exploited. These are based on recharge and abstraction figures • Such assessments do not take into complex factors affecting groundwater availability • Outflows are significant in some basins--Narmada • Static groundwater resources are huge in Gangetic basin • Assessment based on water level fluctuation also can be misleading in certain cases--hard rock areas • Assessment should involve complex considerations • Static storage, seasonal fluctuations; economics of extraction; social consequences • Front that point of view, the problems of groundwater over-exploitation tend to be underestimated

11. Who controls the groundwater economy?

12. Pump ownership in India

13. Nature of Groundwater Economy • Water markets are an important socio-economic feature that determines the nature of groundwater economy • As resource become more and more scarce, water markets would give greater opportunities to resource-rich farmers to earn extra income, and put the resource poor farmers in highly disadvantageous position. • The current institutional regime and power pricing policies increases the monopoly power of resource-rich well owners. • But, groundwater markets are not natural oligopolies • The terms of exchange could be changed with changes in legal and institutional regimes governing the use of groundwater

14. Impact of Public Policies on Access Equity in Groundwater Use • Widespread debates on the impact of public policies relating to irrigation on access equity in groundwater • Pump subsidies, power subsidies, especially flat rate system of pricing are being advocated as tools for promoting access equity in groundwater, especially in eastern India • Emergence of competitive of markets, and reduction in selling price are key assumptions underlying the argument • But, they are least likely to impact on the functioning of water markets, as water charges reflect the monopoly power of well/pump owners

15. Impact of public policies on the nature of groundwater economy • This monopoly power comes from the difficulty in obtaining power connections and pump subsidies for diesel engines; and poor transferability of water in physical sense • The real challenge lies in: a] securing electricity connections in farm sector easy; and b] accessing pump subsidies easy for poor farmers • In water-scarce regions, the selling price of water reflect the scarcity value of the resource, and not the pumping cost alone • The well owners charge monopoly rent for water, due to the high cost of investment in drilling wells, low chances of hitting water, and large gaps in demand and supplies

16. Impact of public policies on the nature of groundwater economy • Hence, energy price changes would affect water charges only marginally • While flat rate system gives large well owners natural monopoly in fixing prices, unit pricing would put the small and marginal farmers (well owners) in a more comfortable position in fixing water charges. • They can adjust their prices in response to the market forces • Consumption based pricing would help formalize groundwater economy

17. Size of Groundwater Economy Size of Groundwater Economy based on Groundwater Use in 15 Indian States

18. Major Findings • Growth in wells does not result in irrigation expansion • High well density doesn’t mean intensive groundwater use • Several physical and socio-economic factors drive well density • Groundwater economy is still controlled by large farmers • Flat rate electricity, and current institutional regimes increases monopoly power of large well-owners • Electricity subsidies and pump subsidies do not reduce monopoly power of well-pump owners • Size of groundwater economy: 5 per cent of the GDP

19. Net surface & groundwater irrigated area (1950-51 to 2006-07)

20. Where groundwater is intensively used?

21. Per Capita Groundwater withdrawal in different states (m3/annum)

22. Impact of monopoly power of pump owners on water markets