IDEAS home Printed from https://ideas.repec.org/p/cde/cdewps/316.html
   My bibliography  Save this paper

Free Power, Irrigation and Groundwater Depletion: Impact of the Farm Electricity Policy of Punjab, India

Author

Listed:
  • Disha Gupta

    (Department of Economics, Delhi School of Economics)

Abstract

This paper provides causal evidence of the impact of a change in the policy regime from flat rate to free farm electricity pricing, introduced in Punjab, India in February 1997 using a difference-in-differences framework. Based on village-level data from the second and the third rounds of the Minor Irrigation Census, the study finds a differential increase in the number of electric-operated tubewells and horsepower load of pumps in Punjab as compared to an agriculturally-similar and neighbouring state, Haryana, which is taken as the control group. Through these channels, the study finds that percentage deviation in groundwater depth from its mean in the baseline period increased by 16 per cent more in Punjab. Nationally-representative well-level data on groundwater depths from Central Ground Water Board shows impact heterogeneity with sharper effect on groundwater depth for wells that are lying closer to the cut-off of about 10 meters where a technological shift from centrifugal to submersible is required to maintain access to groundwater pumping. Key Words: Water Pricing, Power Subsidies, Groundwater Depletion, Irrigation,Agriculture JEL Codes: O13, Q18, Q25, Q48

Suggested Citation

  • Disha Gupta, 2021. "Free Power, Irrigation and Groundwater Depletion: Impact of the Farm Electricity Policy of Punjab, India," Working papers 316, Centre for Development Economics, Delhi School of Economics.
    • Handle: RePEc:cde:cdewps:316
    as

    Download full text from publisher

    File URL: http://www.cdedse.org/pdf/work316.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mukherji, A. & Das, B. & Majumdar, N. & Nayak, N.C. & Sethi, R.R. & Sharma, B.R., 2009. "Metering of agricultural power supply in West Bengal, India: Who gains and who loses?," Energy Policy, Elsevier, vol. 37(12), pages 5530-5539, December.
    2. Sheetal Sekhri, 2014. "Wells, Water, and Welfare: The Impact of Access to Groundwater on Rural Poverty and Conflict," American Economic Journal: Applied Economics, American Economic Association, vol. 6(3), pages 76-102, July.
    3. Shah, Tushaar & Scott, Christopher & Berkoff, J. & Kishore, A. & Sharma, A., 2007. "The energy-irrigation nexus in South Asia: groundwater conservation and power sector viability," IWMI Books, Reports H040608, International Water Management Institute.
    4. 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.
    5. Meenakshi, J. V. & Banerji, A. & Mukherji, Aditi & Gupta, A., 2012. "Does marginal cost pricing of electricity affect groundwater pumping behavior of farmers?. Project report submitted to International Initiative for Impact Evaluation (3ie) by IWMI," IWMI Research Reports H044958, International Water Management Institute.
    6. Shah, Tushaar & Scott, C. & Kishore, A. & Sharma, A., 2003. "Energy-irrigation nexus in South Asia: Improving groundwater conservation and power sector viability," IWMI Research Reports H033885, International Water Management Institute.
    7. Sarkar, Anindita, 2020. "Groundwater irrigation and farm power policies in Punjab and West Bengal: Challenges and opportunities," Energy Policy, Elsevier, vol. 140(C).
    8. Soumya Balasubramanya & Nicholas Brozović & Ram Fishman & Sharachchandra Lele & Jinxia Wang, 2022. "Managing irrigation under increasing water scarcity," Agricultural Economics, International Association of Agricultural Economists, vol. 53(6), pages 976-984, November.
    9. Eli Feinerman, 1988. "Groundwater Management: Efficiency and Equity Considerations," Agricultural Economics, International Association of Agricultural Economists, vol. 2(1), pages 1-18, June.
    10. Alvaro Calzadilla & Katrin Rehdanz & Richard S.J. Tol, 2011. "Water scarcity and the impact of improved irrigation management: a computable general equilibrium analysis," Agricultural Economics, International Association of Agricultural Economists, vol. 42(3), pages 305-323, May.
    11. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, vol. 92(1), pages 1-45, September.
    12. Shah, Tushaar & Scott, Christopher & Berkoff, Jeremy & Kishore, Avinash & Sharma, A., 2007. "The energy-irrigation nexus in South Asia: groundwater conservation and power sector viability," Book Chapters,, International Water Management Institute.
    13. Kumar, M. Dinesh, 2005. "Impact of electricity prices and volumetric water allocation on energy and groundwater demand management:: analysis from Western India," Energy Policy, Elsevier, vol. 33(1), pages 39-51, January.
    14. A. Colin Cameron & Douglas L. Miller, 2015. "A Practitioner’s Guide to Cluster-Robust Inference," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 317-372.
    15. M. Dinesh Kumar & Chris J Perry, 2019. "What can explain groundwater rejuvenation in Gujarat in recent years?," International Journal of Water Resources Development, Taylor & Francis Journals, vol. 35(5), pages 891-906, September.
    16. Banerji, A. & Meenakshi, J.V. & Khanna, Gauri, 2012. "Social contracts, markets and efficiency: Groundwater irrigation in North India," Journal of Development Economics, Elsevier, vol. 98(2), pages 228-237.
    17. Sheetal Sekhri & Sriniketh Nagavarapu, 2013. "Less Is More? Implications of Regulatory Capture for Natural Resource Depletion," Virginia Economics Online Papers 408, University of Virginia, Department of Economics.
    18. Sayre, Susan Stratton & Taraz, Vis, 2019. "Groundwater depletion in India: Social losses from costly well deepening," Journal of Environmental Economics and Management, Elsevier, vol. 93(C), pages 85-100.
    19. Singh, Karam, 2012. "Electricity Subsidy in Punjab Agriculture: Extent and Impact," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 67(4), pages 1-16.
    20. Sidhu, Balsher Singh & Kandlikar, Milind & Ramankutty, Navin, 2020. "Power tariffs for groundwater irrigation in India: A comparative analysis of the environmental, equity, and economic tradeoffs," World Development, Elsevier, vol. 128(C).
    21. 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.
    22. Feinerman, Eli, 1988. "Groundwater management: Efficiency and equity considerations," Agricultural Economics, Blackwell, vol. 2(1), pages 1-18, June.
    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. Aditya, Korekallu Srinivasa & Dagmar, Mithöfer, 2024. "Understanding Farmers' Policy Preferences for Solar Powered Irrigation Systems in Karnataka, India: A Choice Experiment Approach," IAAE 2024 Conference, August 2-7, 2024, New Delhi, India 344382, 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. 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.
    2. 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.
    3. Sidhu, Balsher Singh & Kandlikar, Milind & Ramankutty, Navin, 2020. "Power tariffs for groundwater irrigation in India: A comparative analysis of the environmental, equity, and economic tradeoffs," World Development, Elsevier, vol. 128(C).
    4. Mitra, Archisman & Balasubramanya, Soumya & Bouwer, Roy, 2021. "Can electricity rebates modify groundwater pumping behaviours? Evidence from a pilot study in Punjab, India," 2021 Annual Meeting, August 1-3, Austin, Texas 313871, Agricultural and Applied Economics Association.
    5. Stergios Athanassoglou & Glenn Sheriff & Tobias Siegfried & Woonghee Huh, 2012. "Optimal Mechanisms for Heterogeneous Multi-Cell Aquifers," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 52(2), pages 265-291, June.
    6. Mukherji, A. & Das, B. & Majumdar, N. & Nayak, N.C. & Sethi, R.R. & Sharma, B.R., 2009. "Metering of agricultural power supply in West Bengal, India: Who gains and who loses?," Energy Policy, Elsevier, vol. 37(12), pages 5530-5539, December.
    7. Khanna, Tarun M., 2022. "Using agricultural demand for reducing costs of renewable energy integration in India," Energy, Elsevier, vol. 254(PC).
    8. Yogita Sharma & Baljinder Kaur Sidana & Sunny Kumar & Samanpreet Kaur & Milkho Kaur Sekhon & Amrit Kaur Mahal & Sushant Mehan, 2023. "Pre and Post Water Level Behaviour in Punjab: Impact Analysis with DiD Approach," Sustainability, MDPI, vol. 15(3), pages 1-18, January.
    9. Bjornlund, Vibeke & Bjornlund, Henning, 2019. "Understanding agricultural water management in a historical context using a socioeconomic and biophysical framework," Agricultural Water Management, Elsevier, vol. 213(C), pages 454-467.
    10. Aditi Mukherji, 2022. "Sustainable Groundwater Management in India Needs a Water‐Energy‐Food Nexus Approach," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(1), pages 394-410, March.
    11. Erenstein, Olaf, 2009. "Comparing water management in rice-wheat production systems in Haryana, India and Punjab, Pakistan," Agricultural Water Management, Elsevier, vol. 96(12), pages 1799-1806, December.
    12. 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.
    13. Gupta, Disha, 2024. "Pricing Farm Electricity, Water Use and Efficiency: The Case of Paddy Cultivation in Punjab," IAAE 2024 Conference, August 2-7, 2024, New Delhi, India 344328, International Association of Agricultural Economists (IAAE).
    14. 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).
    15. Ciccarelli, Carlo & De Fraja, Gianni & Vuri, Daniela, 2021. "Effects of passive smoking on prenatal and infant development: Lessons from the past," Economics & Human Biology, Elsevier, vol. 42(C).
    16. Gibbons, Steve & Overman, Henry G. & Patacchini, Eleonora, 2015. "Spatial Methods," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 115-168, Elsevier.
    17. Corbett Grainger & Thanicha Ruangmas, 2018. "Who Wins from Emissions Trading? Evidence from California," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(3), pages 703-727, November.
    18. Samuel Nocito & Marcello Sartarelli & Francesco Sobbrio, 2021. "A Beam of Light: Media, Tourism & Economic Development," CESifo Working Paper Series 9055, CESifo.
    19. Nocito, Samuel & Sartarelli, Marcello & Sobbrio, Francesco, 2023. "A beam of light: Media, tourism and economic development," Journal of Urban Economics, Elsevier, vol. 137(C).
    20. Graziella Bertocchi & Arcangelo Dimico, 2020. "Bitter Sugar: Slavery and the Black Family," Department of Economics 0172, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".

    More about this item

    Keywords

    water pricing; power subsidies; groundwater depletion; irrigation; agriculture jel codes: o13; q18; q25; q48;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

    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:316. 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.