Social contracts, markets and efficiency: Groundwater irrigation in North India

This paper uses primary data to analyze the institutions and informal markets that govern groundwater allocation in a sugarcane-cultivating village in North India. We find that, in contrast to earlier literature, the observed water trades result in efficient water allocation across farms. We interpr...

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Bibliographic Details
Published in:	Journal of development economics Vol. 98; no. 2; pp. 228 - 237
Main Authors:	Banerji, A., Meenakshi, J.V., Khanna, Gauri
Format:	Journal Article
Language:	English
Published:	Elsevier B.V 01-07-2012
Subjects:	Agricultural investment Agricultural productivity Agriculture Groundwater India Market structure Power supply Social contract Social contracts Water management Water markets Water pricing Water supply Q1 Q2 Market structure Water pricing L1 Water markets Social contracts
Online Access:	Get full text
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Summary:	This paper uses primary data to analyze the institutions and informal markets that govern groundwater allocation in a sugarcane-cultivating village in North India. We find that, in contrast to earlier literature, the observed water trades result in efficient water allocation across farms. We interpret this and other stylized facts in terms of a social contract using a simple bargaining model with limited inter-player transfers. Poor functioning of the power sector leads to reduced pumping and a water supply constraint. Simulations show that power supply reform can significantly increase farm yields, and be financed out of increased farm profits.
Bibliography:	ObjectType-Article-2 SourceType-Scholarly Journals-1 ObjectType-Feature-1 content type line 23
ISSN:	0304-3878 1872-6089
DOI:	10.1016/j.jdeveco.2011.07.005