Farmer’s willingness to pay for groundwater irrigation: The case of Uttar Pradesh

Irrigated agriculture consumes the largest share of freshwater resources, including both surface water and groundwater. As high as 40 percent of irrigation is dependent on groundwater, accounting for 70 percent of the total groundwater extractions world over and this share is predicted to increase with climate change. 

In India, most rural areas have public tube wells that supply irrigation water at minimal charge through narrow channels along the field on the basis of a scheduled timetable informs this paper titled 'Are farmers willing to pay for groundwater irrigation? Insights from informal groundwater markets in Western Uttar Pradesh, India' published in Agricultural Water Management.

However, this system has become defunct in many regions due to ineffective water distribution systems, availability of on-demand irrigation water supply by privately owned tube wells, theft, leakages and other factors. There is no formal system for regulating groundwater markets in India, and land and water rights are still inseparable with groundwater beneath the land being assumed to be the private property of the  landowners. 

The current groundwater price is the price of electricity paid by farmers for their private tube-wells.. In such a scenario, it becomes crucial to understand the farmer’s willingness to pay for groundwater irrigation if an organised institutional governance is established and timely irrigation service is ensured to promote efficient use of groundwater by farmers. 

Groundwater irrigation in Uttar Pradesh

The paper discusses the findings of a study that explores farmer’s willingness to pay for groundwater irrigation and its drivers in the context of organised groundwater irrigation by the farmers from Meerut and Muzaffarnagar districts from the western region of Uttar Pradesh, India. More than 75 percent of irrigation in both districts is dependent upon groundwater resources and water is mainly extracted through private tubewells.

Groundwater development in both the districts is already in the semi-critical stage. Groundwater is extracted through privately owned water extraction machines like tube-wells and villages included in the study are located at the tail-end zone of the irrigation canals, where water is scarcely available in the peak seasons (when there is no or minimal supply of water through precipitation) due to a lack of management by local authorities. Metered tube-wells have not been introduced yet in the area and farmers who have their own unmetered tube-wells pay a fixed electricity bill which is based on the pump capacity of the tube-wells.

Tariff for the unmetered tube-wells was INR 170 per month per base horsepower (bhp), that is, INR 1700 for 10 bhp. The farmers without tube-wells either have access to canal water or buy it from the tube-well owners. The buying and selling of the extracted water is primarily determined by the cost of running tube-well, that is, the fixed electricity bill and maintenance cost and in some cases, it is influenced by the demand and supply gap (over and above the cost incurred).

It is important to explore the farmer’s willingness to pay in the context of this unorganised functioning of groundwater markets that need to be regulated in order to prevent the over extraction of groundwater.

Findings:

• Most of the farmers were small landholders with an average 1.61 ha of total farm-size. Around 70 percent of the farmers were involved in groundwater trading, out of which 25 percent were involved in self-use and selling. The average groundwater trading price was found to be INR 41.67. Most of the farmers (74 percent) agreed with the water meter installation as an alternative for managing the overextraction of groundwater. However, 52 percent of farmers did not agree that the current irrigation practices could result in water scarcity in the near future.
• The farmers who agreed to pay thought that an organised system could ensure a more reliable and certain irrigation water supply in the future as most of the groundwater buyers suffered from noncooperative behaviour from the sellers and led to losses in productivity. Non-accessibility of alternate sources of irrigation and benefits of water pricing for preventing flood irrigation also indicated the need for a mechanism that could ensure future water security.
• Farmers, who were involved in buying water had a higher WTP for groundwater irrigation and were more inclined towards organised groundwater markets that could provide a reliable and quality groundwater irrigation service.
• With reference to farmers who had not expressed their WTP, a majority of them were self-users or self-users and sellers. Farmers who had their own tube-wells and were not involved in buying water were not willing to pay for groundwater irrigation.

• In the case of farmers who were not willing to pay, the major reasons cited were corruption and lack of trust in the government implemented schemes. Farmers were apprehensive about the success of water meters in managing the over-exploitation of groundwater due to power theft. Further, farmers believed that instead of charging for groundwater, the focus had to be on rejuvenating and regular cleaning of the surface water resources like ponds that could help in groundwater recharge.

• The study found that education increased both the participation and the bid levels of WTP for organised groundwater irrigation indicating that educated farmers are realising the criticality of the present situation. 
• Land size did not influence participation in WTP but it had a significant positive impact on the bid level for WTP. Sugarcane crop influenced and led to higher bids as it was considered the least risk crop on yield providing farmers with the assurance of insured income.
• Mean price influenced the willingness of farmers to participate in organised groundwater irrigation indicating farmers’ apprehensions about the cost of groundwater irrigation.

Way forward

Education and acknowledgment of future water scarcity among farmers were found to be crucial for bid levels indicating the importance of awareness among the farming community about irrigation water resources. Also farmers with no tube-wells (buyers) had a higher WTP if an organised groundwater market was introduced as compared to tubewell owners.  

While some farmers were not willing to change from their private ownership of groundwater, majority were willing to pay, indicating that groundwater irrigation reforms were socially acceptable, creating a favourable environment for organised groundwater irrigation in the region.

The study indicated that providing information about the dynamics of the groundwater irrigation to farmers could promote their acceptance of water as an economic good and change their attitude towards the usage of irrigation water. The positive relationship between the bid levels and land size suggested that a more equitable irrigation system could be introduced through volumetric groundwater irrigation pricing compared to the present flat electricity tariff system in the region. 

However, since a majority of farmers possess marginal and small land holdings, it must be ensured that volumetric pricing does not increase the irrigation cost for the farmers who do not own the tube-wells and buy groundwater from tube-well owners. For this, the government interventions are required to formulate the base water tariffs.

The farmer's emphasis on the reliable and regular source of irrigation for WTP suggests that the economic measures need to be complemented with efforts to sustain groundwater by investing in the rejuvenation of the water recharging infrastructures like ponds and canals, concludes the paper.