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Costs of Resource Degradation Externalities - A Study of Groundwater Depletion in Andhra Pradesh

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  • V. Ratna Reddy

    (Centre for Economic and Social Studies)

Abstract

This paper looks in to the process of environmental degradation and the resultant externalities in the context of groundwater depletion in drought prone regions. The main objective here is to estimate the costs of groundwater depletion externalities and examine the costs and benefits from groundwater replenishing mechanisms in different ecological contexts. This study shows how groundwater exploitation in India is resulting in economic losses to individual farmers apart from ecological degradation. It is argued that policies towards strengthening the resource base (abatement mechanisms) and equitable distribution of the resource (property rights) would be beneficial, economically as well as ecologically. The cost-benefit comparison is in favour of investment in replenishment mechanisms such as irrigation tanks and percolation tanks. The situation of over extraction and the resultant environmental degradation is a consequence of lack of appropriate and adequate policies (policy failure) for managing the subsurface water resources. Hither to, groundwater policies (subsidised credit, power, etc) are in the nature of encouraging private initiatives in groundwater development. While these policies helped in promoting groundwater development in the regions where groundwater development was below potential, they have led to over exploitation of the resource in fragile resource regions. On the other hand, no attempts were made (at the policy level) to strengthen the natural resource base in terms of replenishing the water table. On the contrary, groundwater development is seen as a substitute for tanks, which are the main agents of replenishment.

Suggested Citation

  • V. Ratna Reddy, 2003. "Costs of Resource Degradation Externalities - A Study of Groundwater Depletion in Andhra Pradesh," Development Economics Working Papers 22332, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:develo:22332
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    References listed on IDEAS

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    1. K V Raju, 2000. "Participatory Irrigation Management in Andhra Pradesh: Promise, Practice and A Way Forward," Working Papers 65, Institute for Social and Economic Change, Bangalore.
    2. Bell, Clive, 1990. "Reforming Property Rights in Land and Tenancy," The World Bank Research Observer, World Bank, vol. 5(2), pages 143-166, July.
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    Cited by:

    1. V Ratna Reddy & M Srinivasa Reddy, 2011. "Groundwater: Development, Degradation and Management (A Study of Andhra Pradesh)," Working Papers id:4294, eSocialSciences.
    2. Anantha K H & K V Raju, 2008. "Groundwater Over-Exploitation, Costs and Adoption Measures in the Central Dry Zone of Karnataka," Working Papers 202, Institute for Social and Economic Change, Bangalore.
    3. Anantha, K. H. & Raju, K. V., 2008. "When does overexploitation really matter?: a case of groundwater extraction in Karnataka, India," Conference Papers h042913, International Water Management Institute.
    4. Sharif, Mahin & Ashok, K.R., 2011. "Impact of Groundwater Over-draft on Farm Income and Efficiency in Crop Production," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 24(2), December.

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