GROUNDWATER MARKET AND INSTITUTIONAL GOVERNANCE: A STUDY OF FARM SECTOR OF WESTERN UTTAR PRADESH

Abstract

Groundwater governance for irrigation has become an intriguing area of research, particularly in developing economies like India, where groundwater beneath an individual's land is treated as private property, and the aquifers are drying up due to excessive groundwater development for irrigated agriculture. This thesis endeavors to systematically investigate the viability of implementing organised groundwater markets as a regulatory mechanism for managing irrigation groundwater use through primary data collected from 300 farm households in Western Uttar Pradesh, India. To understand the dynamics of water markets as an institution for water management per se, the present study conducts a systematic review and meta-analysis to identify how water markets impact irrigation water use in different regions. To analyse the scope of application of the organised groundwater markets, the study first examines the institutions, structure, nature, and determinants of groundwater trading in the study region using descriptive statistical analysis and binary logistic regression. Further, the farmers' perceptions about the existing informal groundwater markets and factors impacting their perceptions are examined using the Likert scale, descriptive statistics, MANOVA, and cross-tabulations. To evaluate the farmers' WTP for the direct-use value of groundwater in a proposed hypothetical organised groundwater market and for its existence value, the contingent valuation approach with Heckman two-step model and contingent ranking analysis with rank-ordered logistic regression model are employed, respectively. The results show that five factors, viz. physical water scarcity, institutional governance, hard infrastructure, reliability in the water market system, and social acceptance, are the key drivers of heterogeneity in the impact of water market models on irrigation water-use efficiency globally. Although the introduction of organized water markets is primarily attributed to the physical scarcity of water in the developed economies like United States of America, however, it is found that without the “soft infrastructure”, inter alia, reliable water rights system, reliable information system, accountable implementation mechanism, and water banking system, the physical scarcity of water has a limited role in promoting water trading. The findings of primary survey on institutional arrangements show that unlike the water governance structure stated in the Model Bill for the Conservation, Protection, Regulation and Management of Groundwater, 2016, no committee or group at the panchayat level regulates groundwater irrigation or trading in the study region. Further, there is no limitation on the number of tube-wells installed in any particular area, and no permission is required to deepen the tube-wells in case of decreasing groundwater levels With reference to structure of the prevailing groundwater market, the study finds that most buyers are marginal and small farmers with no alternate source of irrigation and face the monopolistic groundwater market. The study highlights the farmers’ willingness to accept the change in groundwater governance as most farmers perceive the groundwater markets as a reliable source for irrigation but agree to the unsustainable nature of groundwater extraction in the present informal markets. Besides, farmers prefer more organized forms of groundwater markets over public irrigation facilities and a participatory management approach. At the policy level, the findings on farmers’ WTP for groundwater suggest that farmers are not willing to bear the cost of rejuvenation of groundwater but they are ready to pay per unit of groundwater utilized and are willing to install water meters. In fact, the WTP by tube-well owners, who are not involved in groundwater trading, is found to be lower than that of groundwater buyers, who are primarily marginal and small landholders, implying that even resource-poor farmers are willing to pay higher prices if reliable groundwater irrigation is ensured.