IDEAS home Printed from https://ideas.repec.org/p/cde/cdewps/183.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.cdedse.org/pdf/work183.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Zvi Griliches & Jacques Mairesse, 1995. "Production Functions: The Search for Identification," NBER Working Papers 5067, National Bureau of Economic Research, Inc.
    2. 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), January.
    3. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer.
    4. Singh, D.R. & Singh, R.P., 2003. "Groundwater Markets and the Issues of Equty and Reliability to Water Access: A Case of Western Uttar Pradesh," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 58(1), March.
    5. A. Banerji & J. V. Meenakshi & Gauri Khanna, "undated". "Groundwater Irrigation in North India: Institutions and Markets," Working papers 17, The South Asian Network for Development and Environmental Economics.
    6. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    7. Hanan G. Jacoby & Rinku Murgai & Saeed Ur Rehman, 2004. "Monopoly Power and Distribution in Fragmented Markets: The Case of Groundwater," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(3), pages 783-808.
    8. Siwan Anderson, 2011. "Caste as an Impediment to Trade," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 239-263, January.
    9. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    10. Lensberg, Terje, 1988. "Stability and the Nash solution," Journal of Economic Theory, Elsevier, vol. 45(2), pages 330-341, August.
    11. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    12. Schoengold, Karina & Zilberman, David, 2007. "The Economics of Water, Irrigation, and Development," Handbook of Agricultural Economics, in: Robert Evenson & Prabhu Pingali (ed.), Handbook of Agricultural Economics, edition 1, volume 3, chapter 58, pages 2933-2977, Elsevier.
    13. Aggarwal, Rimjhim M., 2007. "Role of risk sharing and transaction costs in contract choice: Theory and evidence from groundwater contracts," Journal of Economic Behavior & Organization, Elsevier, vol. 63(3), pages 475-496, July.
    14. Meinzen-Dick, Ruth Suseela, 1996. "Groundwater markets in Pakistan: participation and productivity," Research reports 105, International Food Policy Research Institute (IFPRI).
    15. 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.
    16. Quirino Paris & Keith Knapp, 1989. "Estimation of von Liebig Response Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 178-186.
    17. Evenson, Robert E. & Pray, Carl E. & Rosegrant, Mark W., 1999. "Agricultural research and productivity growth in India:," Research reports 109, International Food Policy Research Institute (IFPRI).
    18. Vijay Krishna & Roberto Serrano, 1996. "Multilateral Bargaining," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 63(1), pages 61-80.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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.
    21. Balasubramanya, Soumya, 2024. "Rationalizing groundwater use in agriculture in South Asia: the role of technology," IAAE 2024 Conference, August 2-7, 2024, New Delhi, India 344327, International Association of Agricultural Economists (IAAE).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. A.Banerji & Gauri Khanna & J.V. Meenakshi, 2006. "Markets, Institutions And Efficiency Groundwater Irrigation In North India," Working papers 152, Centre for Development Economics, Delhi School of Economics.
    2. A. Banerji & J. V. Meenakshi & Gauri Khanna, "undated". "Groundwater Irrigation in North India: Institutions and Markets," Working papers 17, The South Asian Network for Development and Environmental Economics.
    3. Spulber, Daniel F., 2016. "Patent licensing and bargaining with innovative complements and substitutes," Research in Economics, Elsevier, vol. 70(4), pages 693-713.
    4. Marco Rogna, 2022. "The Burning Coalition Bargaining Model," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 59(3), pages 735-768, October.
    5. Serrano, Roberto, 1997. "Reinterpreting the Kernel," Journal of Economic Theory, Elsevier, vol. 77(1), pages 58-80, November.
    6. Britz, Volker & Herings, P. Jean-Jacques & Predtetchinski, Arkadi, 2010. "Non-cooperative support for the asymmetric Nash bargaining solution," Journal of Economic Theory, Elsevier, vol. 145(5), pages 1951-1967, September.
    7. 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.
    8. 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.
    9. Roberto Serrano, 2005. "Fifty years of the Nash program, 1953-2003," Investigaciones Economicas, Fundación SEPI, vol. 29(2), pages 219-258, May.
    10. Philippe Martin & Thierry Mayer & Florian Mayneris, 2008. "Spatial Concentration and Firm-Level Productivity in France," Sciences Po publications 6858, Sciences Po.
    11. Martin, Philippe & Mayer, Thierry & Mayneris, Florian, 2011. "Public support to clusters: A firm level study of French "Local Productive Systems"," Regional Science and Urban Economics, Elsevier, vol. 41(2), pages 108-123, March.
    12. Sanjaya Malik, 2015. "Conditional technology spillovers from foreign direct investment: evidence from Indian manufacturing industries," Journal of Productivity Analysis, Springer, vol. 43(2), pages 183-198, April.
    13. Roberto Martino & Phu Nguyen-Van, 2014. "Labour market regulation and fiscal parameters: A structural model for European regions," Working Papers of BETA 2014-19, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    14. Nikita Céspedes & María E. Aquije & Alan Sánchez & Rafael Vera Tudela, 2016. "Productividad sectorial en el Perú: un análisis a nivel de firmas," Chapters of Books, in: Nikita Céspedes & Pablo Lavado & Nelson Ramírez Rondán (ed.), Productividad en el Perú: medición, determinantes e implicancias, edition 1, volume 1, chapter 3, pages 70-92, Fondo Editorial, Universidad del Pacífico.
    15. Doraszelski, Ulrich & Jaumandreu, Jordi, 2006. "R&D and productivity: Estimating production functions when productivity is endogenous," MPRA Paper 1246, University Library of Munich, Germany.
    16. Umut Kılınç, 2018. "Assessing Productivity Gains from International Trade in a Small Open Economy," Open Economies Review, Springer, vol. 29(5), pages 953-980, November.
    17. Mion, Giordano & Jacob, Nick, 2020. "On the productivity advantage of cities," CEPR Discussion Papers 14644, C.E.P.R. Discussion Papers.
    18. Joalland, Olivier & Pereau, Jean-Christophe & Rambonilaza, Tina, 2019. "Bargaining local compensation payments for the installation of new power transmission lines," Energy Economics, Elsevier, vol. 80(C), pages 75-85.
    19. James B. Bushnell & Catherine Wolfram, 2009. "The Guy at the Controls: Labor Quality and Power Plant Efficiency," NBER Chapters, in: International Differences in the Business Practices and Productivity of Firms, pages 79-102, National Bureau of Economic Research, Inc.
    20. Venkat Venkatasubramanian & Yu Luo, 2018. "How much income inequality is fair? Nash bargaining solution and its connection to entropy," Papers 1806.05262, arXiv.org.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cde:cdewps:183. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sanjeev Sharma (email available below). General contact details of provider: https://edirc.repec.org/data/cdudein.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.