تأثیر قیمت برق و تخصیص آب حجمی بر انرژی و مدیریت تقاضا آبهای زیرزمینی : تجزیه و تحلیل از غرب هند

In recent years, power tariff policy has been increasingly advocated as a mean to influence groundwater use and withdrawal decisions of farmers in view of the failure of existing direct and indirect regulations on groundwater withdrawal in India. Many researchers argue that pro rata electricity tariff, with built in positive marginal cost of pumping could bring about efficient use of the resource, though some argue that the levels of tariff in which demand becomes elastic to pricing are too high to be viable from political and socio-economic points of view. The paper presents a theoretical model to analyze farmers’ response to changes in power tariff and water allocation regimes vis à vis energy and groundwater use. It validates the model by analyzing water productivity in groundwater irrigation under different electricity pricing structures and water allocation regimes. Water productivity was estimated using primary data of gross crop inputs, cost of all inputs, and volumetric water inputs. The analysis shows that unit pricing of electricity influences groundwater use efficiency and productivity positively. It also shows that the levels of pricing at which demand for electricity and groundwater becomes elastic to tariff are socio-economically viable. Further, water productivity impacts of pricing would be highest when water is volumetrically allocated with rationing. Therefore, an effective power tariff policy followed by enforcement of volumetric water allocation could address the issue of efficiency, sustainability and equity in groundwater use in India.

Several regions of India face groundwater crisis. In many parts of peninsular India, which is underlain by hard rocks, excessive withdrawal of groundwater for irrigation made possible through proliferation and energisation of wells has led to depletion of the resource base, frequent failure of wells and sharp reduction in irrigation potential of wells. In alluvial areas of western India, uncontrolled abstraction through tube wells energised by high capacity pumps led to permanent depletion of shallow aquifers and alarming drops in water levels. Today, agricultural pumping accounts for 31.4 per cent of the total power consumption in India (CMIE, 2002), which observed a steady increase during the past decade mainly owing to the rising cost of abstraction of groundwater. The poor financial working of many State Electricity Boards is attributed to highly subsidised power made available to the farm sector, which accounts for a major chunk of the electricity consumption in the respective states, and power thefts. While some states provide 100 per cent subsidised electricity in the farm sector, some states do not meter agricultural power consumption and charge electricity on the basis of connected load. Deteriorating financial condition severely limit the ability of State Electricity Boards to supply good quality power to the farm sector. In contrast to this, groundwater resources are abundant in eastern India; but its development for irrigation is precariously low. Many researchers have argued that groundwater irrigation could trigger agricultural growth and help alleviate poverty in this resource abundant region (for instance see Shah, 2000). However, this region faces major shortcomings in catering to the rural energy demands. Great deal of consensus exists among researchers over the fact that rural-electrification and power-subsidies in the farm sector have triggered exponential growth in groundwater irrigation in India (Moench, 1995; Shah, 1993; Palmer-Jones, 1995). Many have argued that the current mode of pricing power consumption in the farm sector, which does not reflect the actual unit consumption, creates incentive for wasteful use of both power and groundwater (Kumar and Singh, 2001; Palmer-Jones, 1995; Saleth, 1997). Sustainable approaches to manage groundwater resources that are grounded on a sound footing of good hydro and social sciences are, however, not forthcoming. The groundwater management debate in India has so far focused on many direct and indirect management options: artificial recharge of groundwater in areas facing problems of overdraft; direct regulation of groundwater abstraction through state legislation; indirect regulations through well financing and other leverages; local management of groundwater by user groups; establishment of private/cooperative property rights in groundwater. Some of them have already been tried in different parts of the country. Legal interventions to check and control overdraft were never successful due to their social and political ramifications.1 The National Bank for Agriculture and Rural Development (NABARD) has been using “control of institutional financing for well development” in over-exploited areas; but was by and large ineffective in checking overdraft due to large-scale private financing of well development. In Gujarat, the State Electricity Board deny new agricultural power connections in over-exploited areas, and in critically developed areas when well spacing regulations are violated; but this measure has been ineffective due to the use of old power connections for newly drilled wells (Gass et al., 1996). There have not been many attempts to foster local, community-based initiatives to manage groundwater. So far as water rights reform is concerned, there have been no breakthroughs in the discussions on the institutional processes to institute them. Artificial recharge of groundwater has been tried in many parts of India to arrest depletion, some of which are also community based; but met with very little success. The reasons are many: First, the areas facing depletion problems are falling in arid and semi arid regions where availability of endogenous surface water is extremely limited. Second, unfavourable physical conditions for recharging like poor groundwater storage potential exist in some areas. An important example is the groundwater recharge movement in Saurashtra peninsula of Gujarat, which was primarily driven by religious and spiritual organizations and voluntary movements. Though this decentralized movement of water harvesting claims to have made significant achievements in terms of number of wells and ponds recharged (Shah, 1997; Kumar, 2000b), analysis and available evidences suggest that their impact on depletion and overall water situation could be negligible (Kumar, 2000b). Third: the cost of recharging through artificial recharge structures in terms of the cost per unit volume of water is often prohibitively high. In sum, the existing direct and indirect regulations and direct management interventions have been ineffective in arresting depletion. In the recent years, power tariff policy has been increasingly advocated as an instrument to influence groundwater use and withdrawal decisions of farmers (Shah, 1993; Saleth, 1997). The past decade has seen wide debates on the potential linkage between electricity pricing and groundwater use for irrigation; especially the implication of electricity prices for access equity, efficiency and sustainability in groundwater use (see for instance Moench, 1995). These debates are characterized by differing and often diametrically opposite views on the potential impact of power tariff changes on access equity, efficiency of groundwater use and sustainability of the resource (based on Shah, 1993; Palmer-Jones, 1995; Saleth, 1997; Kumar and Singh, 2001; IRMA/UNICEF, 2001; de Fraiture and Perry, 2002). Many researchers argue that pro rata electricity tariff, with built in positive marginal cost of pumping could bring about efficient use of the resource (Shah, 1993; Moench, 1995; Saleth, 1997; Kumar and Singh, 2001), though some argue that the levels of tariff in which demand becomes elastic to pricing are too high to be viable from political and socio-economic points of view (de Fraiture and Perry, 2002). Narayanamoorthy (1997) argues that influence of power tariff on the consumption of electricity and water would be too less on the ground that it constitutes a meagre portion of the total cost of cultivation. Not much of consensus exist at the fundamental level about appropriate tariff structures, which generate efficiency in resource use, equity in access to groundwater and sustainability of resource use. After Saleth (1997), power tariff policy alone cannot be an effective tool for achieving efficiency, equity and sustainability in groundwater use (Saleth, 1997). Unfortunately, these debates are based on theoretical reasoning and some practical considerations. Saleth (1997) argues that even an imperfect system of groundwater rights will have more sustainable benefits than a most perfectly designed power tariff structure. Many researchers in the recent past have suggested establishment of property rights as a means to build institutional capability to ensure equity in allocation and efficiency in use of water across sectors (Saleth (1993) and Saleth (1996); Singh, 1995; Kumar, 2000c; Narain, 1998). But, again if the rights are allocated only to use water, it can create incentives to use it even when there is no good use of it (Frederick, 1993). Therefore, water rights have to be tradable. The argument is that when tradable property rights are enforced, efficient water markets would develop.2 The price at which water would be traded will reflect the opportunity cost for using water.3 Such transfers can promote access equity and efficiency in use (Kumar et al., 1999; Kumar, 2000c). After Frederick (1993), enforcing privately-owned, property rights that are tradable is critical to establishing conditions under which individuals will have opportunities and incentives to develop and use the resource efficiently, or transfer it to more efficient uses. In the context of Gujarat, several scholars and institutions have argued for establishing tradable property rights in groundwater (IRMA/UNICEF, 2001; Kumar et al., 1999; Kumar and Singh, 2001). There is an absolute paucity of sufficient empirical data to compare and analyse the differential impacts of different levels of pricing of electricity, and groundwater rights allocations on water and energy productivity.

Empirical analyses presented in the paper suggest positive impact of water/electricity price shift, i.e., induced marginal cost of water/electricity on physical efficiency of water use, and water and energy productivity in agriculture. Further, the study establishes positive impact of a combination of water/electricity price shifts, i.e., induced marginal cost of water/electricity, and water allocation on physical efficiency of water use, cropping patterns and overall water and energy productivity. However, physical efficiency and water and energy productivity impacts are remarkably higher when induced marginal cost coupled with water allocation in which individual entitlements are fixed. Hence, the model is validated. These evidences build a strong case for introducing pricing changes in electricity supplied in the farm sector. One of the arguments against price change is the higher marginal cost of supplying electricity under metered system, which according to Shah (1993), could reduce the net social welfare as a result of reduction in: (1) demand for electricity and groundwater; and (2) net surpluses individual farmers could generate from cropping. Another argument against using pricing is that for power tariff levels to be in the responsive region of power demand curve, prices are often too high that it may become socially unviable. The analyses presented in the paper, however, question the validity of these arguments. First, the argument that metering is expensive and that marginal cost of supplying electricity would increase with increased pumping is based on the assumption that with price shifts, the tendency to pilfer electricity would increase and therefore the cost of preventing that would be high. Now the aggregate demand for electricity and groundwater in irrigation is a function of the demand rates (electricity and water requirements per unit of land), and the total area under irrigation. The empirical analyses show that while the demand rates reduced due to price shift, the net surpluses from every unit of energy/water used increased. Again, owing to the improvements in quality and quantity of power supply, farmers might increase the area under irrigation, though this may work against the objective of cutting down the draft. It is important to note that under flat rate system of pricing, regulating power supply is extremely important to achieve higher social efficiency. Therefore, the net social welfare due to induced marginal cost would be more. As regards the second argument, in spite of the higher prices, the net economic returns from farming are higher for shareholders of tube well companies, and those engaged in sharecropping with well owners, as compared to water selling well owners. They manage with less quantities of water for the same crop through efficiency improvements in irrigation; use all inputs resources efficiently to get higher yield rates; and adopt cropping patterns with combination of crops that are inherently more water productive. Though the net surplus from every unit of water and electricity used were found to be less for water buyers than for well owners, it could be mainly due to the unreliable irrigation supplies. Due to unreliable and inadequate irrigation, water buyers were not able to get differential returns sufficient to offset the effect of higher irrigation cost. This further advance the argument put forth by Kumar and Singh (2001) that net farm surplus are more elastic to the quality of irrigation than its cost. But, as analyses suggest higher demand reduction in groundwater and electricity would be achieved if volumetric rationing of energy/water were done coupled with induced marginal cost of using energy/water. Though energy allocation through scientific power supply rationing is an effective way to cut down the demand for electricity, thereby groundwater withdrawal, this option has serious limitations. First of all, “hour of power supply” is just one factor affecting energy consumption, the other factors being capacity of machinery used (pump horsepower, etc.) and number of machinery. Second, energy requirement is not constant across farms. The larger holders would require more energy supplies as compared to small holders. Third, the energy required to pump unit volume of water varies depending on geo-hydrological environments. Fourth, with induced cuts in power supply hours, they would be motivated to adopt higher capacity pumps or install more water extraction structures. On the other hand, water allocation on socioeconomic considerations would automatically take care of the equity issues. Proper rationing of groundwater withdrawal along with unit pricing of electricity, could, therefore, be an effective tool for achieving efficiency, sustainability and equity. When water becomes scarce, re-allocation of the resource to economically more efficient uses becomes a powerful instrument for managing its demand (Frederick, 1993; Rosegrant and Ringler, 1998). Some of the fears associated with such water transfers are that concerns such as equity, access to water for basic survival, food security etc., do not get adequately addressed (Rosegrant and Ringler, 1998). The negative equity effects of water allocation can be mitigated if water allocation is done under a congenial legal and institutional environment of properly instituted water rights (Frederick, 1993; Rosegrant and Ringler, 1998). The study showed that under volumetric water entitlements (rationing) and unit prices, farmers use lion’ share of their share of water to grow crops which are economically efficient and fully abandon cereals like bajra that are low water-efficient. This could be at the cost of household nutritional security. Under allocated water rights, if opportunities for transferring water to urban areas exist, it might lead to problems of local food shortages. But introducing water rights reforms would require arduous institutional processes for creating participatory institutions at various levels from aquifer/basin to watersheds and villages involving groundwater users for allocating volumetric water rights, and monitoring and enforcing water use (Kumar, 2000c). Finally, whether one should go for electricity tariff reforms or a combination of tariff reform and water rights reform would depend on several considerations, the most important of which are physical, social and legal, i.e., gravity of groundwater depletion problems, possibility of community mobilization, and pursuing legal reforms, respectively. In regions where groundwater ecology is severely threatened, electricity tariff reform alone will not be sufficient to achieve the goals of efficiency, access equity and sustainability. Water rights reforms also will have to be initiated along with tariff reforms, though it will be more arduous than tariff reforms. The water rights reforms would complement tariff reforms and hence can go hand in hand with. The ability to introduce unit based tariff would depend heavily on the ability of the electricity departments to muster political support. On the other hand, instituting private property rights in water would require creation of water rights law and local institutional development apart from mustering political support. Though the resistance to any reform, electricity pricing or water rights, would be high in regions where communities heavily depend on groundwater for their survival like in north Gujarat region, the chances of mustering support for the same are also likely to be higher in such regions, as the section of the community which pays the price of lack of appropriate electricity pricing structure and well defined water rights—in terms of reduced benefit of electricity subsidies, prohibitively high water rates and poor access to groundwater for survival—, is much larger than those who benefit from them and their number increases as depletion continues.