Social contracts, markets and efficiency: Groundwater irrigation in North India

This paper uses primary data to analyze the institutions and informal markets that govern groundwater allocation in a sugarcane-cultivating village in North India. We find that, in contrast to earlier literature, the observed water trades result in efficient water allocation across farms. We interpr...

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Bibliographic Details
Published inJournal of development economics Vol. 98; no. 2; pp. 228 - 237
Main Authors Banerji, A., Meenakshi, J.V., Khanna, Gauri
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.07.2012
Subjects
Agricultural investment
Agricultural productivity
Agriculture
Groundwater
India
Market structure
Power supply
Social contract
Social contracts
Water management
Water markets
Water pricing
Water supply
Q1
Q2
Market structure
Water pricing
L1
Water markets
Social contracts
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Summary:This paper uses primary data to analyze the institutions and informal markets that govern groundwater allocation in a sugarcane-cultivating village in North India. We find that, in contrast to earlier literature, the observed water trades result in efficient water allocation across farms. We interpret this and other stylized facts in terms of a social contract using 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, and be financed out of increased farm profits.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0304-3878
1872-6089
DOI:10.1016/j.jdeveco.2011.07.005