Groundwater Market in West Bengal, India: Does it Display Monopoly Power?

Abstract

Based on village-level primary household survey in three districts of West Bengal, the present study tries to understand the groundwater market structure using the standard market theory. Comparing the internal rate of return of private investors on groundwater irrigation with past studies, it is found that although the degree of monopoly has gone down in the state over time, a certain element of monopoly still exists in the groundwater market. The estimates of price-tomarginal cost ratios and the Lerner index amply demonstrate the existence of high degree of monopoly in groundwater market. The study also shows that since banks give loans based on collateral, it is the large farmland owners who benefit from these bank loans for installation of electric submersibles for groundwater irrigation. Factors such as availability of rain and canal water, advance payment for water, distance of the land from the irrigation source, and maintenance and labour cost of water extraction mechanism also affect the price of water. As the groundwater extraction increases, it leads to lowering of the groundwater table leading to increasing cost for the water seller who in effect transfers the increasing cost to price leading to a rise in groundwater prices. This is a cause of concern not only for the small and marginal farmers but also for the sustainability of groundwater. Studies in Microeconomics6(1-2) 105-129

An economic analysis of groundwater markets and water use efficiency in hard rock area of Hosur union Krishnagiri district of Tamil Nadu

“…Structure of groundwater markets Selfusers (SU), Selfusers + Sellers (SU+S), Selfusers + Sellers + Buyers (SU+S+B), Owners + Sellers (OS), and Buyers are the five market structures studied in the field (Acharyya et al, 2018). Table 2 shows the distribution of farmers in the study area based on their operational holding size under these five different groundwater market structures.…”

Groundwater Markets in South Asia: A Bibliometric Assessment of Challenges and Opportunities for Sustainable Irrigation Development

“…This is more apparent in water-scarce regions (with a large irrigation deficit; Singh, 2007;Singh et al, 2020). Besides, the sellers almost always demand advance payments on water and, in most cases, provide less than what was agreed upon (Acharyya et al, 2018;Saleth 1994aSaleth , 1994bShah, 1993). Without appropriate oversight, such 'extra-legal' processes are manifest throughout South Asia (Easter et al, 1999;Saleth, 1998;Thobani, 1997).…”

“…The latter pertains to social factors such as personal and kinship relationships between buyers and sellers, local customs and conventions and political considerations (water trade rarely occurs between farmers of opposing parties; Dubash, 2002;Naz, 2010;Saleth, 1998). Additional factors include (a) land quality, (b) cropping preferences, (c) irrigation scheduling, (d) availability of additional water sources (rain/canal water), (e) distance between cropping field and irrigation source and (f) labour cost of water extraction (Acharyya et al, 2018). Buying decision-making varies inversely with landholding sizes and educational levels of household heads (Meinzen-Dick, 1996;Saleth, 1998;Sharma & Sharma, 2006).…”

“…However, Rica et al (2012) maintained that the GWUAs first require (a) legal powers and legitimation by RWAs and (b) abolition of top-down governance (command and control). From La Mancha Aquifer in Spain, Lopez-Gunn (2009) reflected upon mutually beneficial collective action (MBCA) via the formation of Water Users Association (WUA) and emphasized the need for an Institutional Development Framework (IDF). The author also stressed the need for bonds of trust between the WUAs and water authorities.…”

“…In this regard, a potential strategy could be to 'exploit' farmers' perceptions and apprehensions about economic losses due to climatic anomalies, which are largely responsible for their willingness to take on various adaptive strategies (Findlater et al, 2018a(Findlater et al, , 2018b. Lopez-Gunn (2009) observed that the recurrence of drought in Spain paved the way for collective action. The increased frequencies of extreme climate events in South Asia (e.g., drought) and farmers' growing apprehensions over economic losses could lead to more wilful…”