QUESTION
Solution Exchange discussion: Economic incentives to conserve water - Experiences; Advice

Compiled by Nitya Jacob, Resource Person and Sunetra Lala, Research Associate

From Ajay Agrawal, Anjali, Bilaspur, Chhattisgarh

Posted 9 December 2010

I work with Anjali, an NGO based in Bilaspur, Chattisgarh. One of ANJALI’s mandates is to encourage people to adopt water recharging methods on an everyday basis to address water problems in the area. These include over-exploitation of groundwater and pollution. Owing to this, the region faces a recurrent water shortage.

Bilaspur and its surrounding villages are facing groundwater depletion. Water levels have gone down considerably and the only way to access the groundwater is by deepening the existing borewells, an expensive proposition. The over-exploitation of groundwater and surface water sources is one of the main reasons for this situation. Other reasons include a rise in the local population and increased industrial activities that have also led to increased demand for water in the area.

I request community members to please share the following to help us address the situation:

       Are there any examples and studies from the field, which show the economic impact of improved groundwater and surface water on communities/households?

        What are the economic incentives that we can use to encourage communities/households to improve their underground and surface water source resources?

If economic incentives with existing capital arrangements are available for specific methods to augment water availability, then we can motivate the people at the panchayat level to adopt such techniques.  We are already working in rural areas to harvest rainwater.  However, by adopting some alternate measures of water conservation, the communities would be better benefitted.

Responses were received, with thanks, from

1.     Subodh Tamrakar, Rural Environment Development Society, Sagar

2.     Nitya Jacob, United Nations Children’s Fund (UNICEF), New Delhi

3.     Ramakrishna Nallathiga, Centre for Good Governance, Hyderabad

4.     D V Deshpande, NABARD, Mumbai

5.     M P Swarnkar, MPCON, Indore

6.     Prabhat Pal, Development Consultant, Jaipur

7.     Kulasekaran Srinivasan, Plan India , New Delhi*

8.     Sanjay Belsare, Water Resources Department, Nashik, Maharashtra*

*Offline Contribution 

Summary of Responses

In India , groundwater constitutes a major source of water for human needs – domestic, farming and industrial. Dipping water tables have meant people need to spend more and more to access this resource either through deepening existing borewells, procuring new pumping equipment or higher energy costs to pump water from greater depths. In fact, many farmers’ suicides are because of their failure to repay loans for sinking borewells to irrigate their field.

This has spurred several projects and studies on groundwater augmentation through a mix of watershed development projects (WDPs) and demand control. One study points to a cost benefit of WDP, after expenses, of 3.0, that means a return of 300 per cent on the initial expenditure. The additional water available from WGPs helps people take up non-farm activities in addition to helping them augment farming. The gains are compounded with demand-side management including more efficient irrigation and cultivation of crops suitable to the local climate.

A study on 37 watersheds across India (Evaluation of Watershed Development Programmes in India, Central Research Institute for Dryland Agriculture, Indian Council for Agricultural Research, 2004) states during the execution phase of WDP, there village people enjoy higher incomes and there is lower migration from villages. The report says the cost-benefit ratios exceed 3.0 since farmers can grow high value-added crops. However, it cautions that a decade after the projects ended, there is little difference between project and non-project villages. There are also no institutions to maintain the infrastructure. This is because people concentrate on short-term gains rather than maintaining the watershed for the long term.

Watershed improvement through trenching, contour bunds, gabion dams, farm ponds and bunds, earthen dams and gully plugs can significantly raise soil moisture and groundwater availability. In the Kesli block, Sagar District, Madhya Pradesh, the Rural Environment Development Society has completed WDPs in 11 villages. As a result, farmers have started farming on fallow land and further developed agriculture around ponds; they have got immediate economic benefits from the WDPs.

The Gujarat government started the Jyotirgram scheme in 2003. It separated power supply in rural areas into farm and non-farm channels. Under the farm channel, it assured farmers of reliable supply for eight hours, enough to meet their irrigation needs. This has reportedly brought down water wastage while improving farm productivity. Another successful example from Maharashtra is that of the Paani Panchayats, a voluntary activity by farmers engaged in the collective management of water for harvesting and equitable distribution to improve their economic condition.

Pricing is an alternative to legally controlling groundwater extraction, but only if the collection mechanism is effective and rigorous, to control extraction. If this is not the case, it is usually better to encourage farmers to move towards high-value agriculture, such as horticulture.

Another approach is to work out the cost of groundwater. A study, Economic Valuation of Natural Resource Damages: An Application to Groundwater Mining in Delhi conducted in 2007, has put an extremely high cost to groundwater in Delhi . The study says the annual cost of groundwater is about Rs. 4,952 crores. It has calculated the cost of avoiding the groundwater that Delhi mines with surface water from a dam the Himalayas . Then it has added on the cost of replacing poor quality groundwater in Delhi caused by over-exploitation. Studies like these are excellent for creating awareness about the impact of mining groundwater and thereby controlling demand.

In cities, additional research shows, municipalities can achieve partial control over groundwater abstraction if they charge for disposal of waste water. Many cities, led by Chennai, have rules for rooftop rainwater harvesting that has increased groundwater availability. However, cities have done little to prevent groundwater mining. Bangalore , for example, levies a charge on waste water that reflects part of the cost for treating this water that can come from multiple sources – rain, municipal supply and groundwater. The flip side of this argument is India ’s total urban waste water treatment capacity can handle only 27 per cent of the waste water generated.

There are several field examples that highlight the positive economic of watershed treatment, and improve groundwater availability as a result. The more successful, long-term initiatives have built social capital in additional to physical infrastructure that has helped them deliver results even after the proponents have withdrawn. What is clear from these examples is that these initiatives have improved the livelihoods of local people during execution and for some time thereafter.

Comparative Experiences

Gujarat

Jyotigram scheme leads of economic gains and efficient water use (from  Nitya Jacob, United Nations Children’s Fund (UNICEF), New Delhi)

Under the Jyotirgram scheme started in 2003, the state separated electricity feeders for agriculture and non-farm uses in rural areas. The aim was to provide an agreed, reliable power supply for eight hours to farmers. The scheme has raised non-agricultural incomes, led to more efficient use of power and groundwater for agriculture, reduced use of power by farmers by 37 per cent and drawdown of groundwater.

Madhya Pradesh

Rural Environment Development Society (REDS) helps to increase farm productivity by conserving water, Sagar, Damoh and Ratlam Districts (from  Subodh Tamrakar, Rural Environment Development Society, Sagar)

The Kesli Block of the district is covered with basalt rock which is hard and non-porous. When REDS started working here the area had low agricultural productivity. They constructed structures like staggered trenches, contour trenches, farm ponds, etc. The effect was increase in subsoil water and groundwater recharge. Farmers have now developed their fallow land for agriculture and also changed their cropping pattern from kodo-kutki to soyabean. Read more.

Related Resources 

Recommended Documentation

Economic valuation of Natural resource Damages:An application to ground water mining in NCT-Delhi (from Ramakrishna Nallathiga, Centre for Good Governance, Hyderabad)

Paper; by Ramakrishna Nallathiga; Centre for Good Governance; Hyderabad; February 2007

Available at http://www.solutionexchange-un.net.in/public/wes/cr/res-22121001.pdf (PDF; Size: 1MB)

Describes the study carried out in NCT-Delhi to apply the economic valuation framework for estimating the costs of mining of groundwater

From D V Deshpande, NABARD, Mumbai

The Indo German Watershed Development Programme (IGWDP), Maharashtra

Article; by National Bank for Agriculture and Rural Development; Maharashtra

Available at http://www.nabard.org/farm_sector/devp_maha.asp

Describes the IGWDP project which is an integrated programme for rehabilitation of watersheds for the regeneration of natural resources

Evaluation of Watershed Development Programmes in India

Paper; by Y.V.R. Reddy, G. Sastry, B. Hemalatha, Om Prakash and Y.S. Ramakrishna; Central Research Institute for Dryland Agriculture (ICAR); 13th International Soil Conservation Organisation Conference; Brisbane; July 2004;

Available at http://www.tucson.ars.ag.gov/isco/isco13/PAPERS%20R-Z/REDDY.pdf (PDF; Size: 356KB)

Evaluates ongoing watershed development programmes in India and assesses how they have lead to soil and water conservation and economic gains

From Sunetra Lala, Research Associate

Factors Influencing Farmers’ Willingness to Protect Groundwater from Non-point Sources of Pollution in the Lower Bhavani River Basin, Tamil Nadu, India  

Paper and Presentation; by Sacchidananda Mukherjee; WWF-India; Water Environment Partnership in Asia (WEPA); Malaysia; October 2008

Available at http://www.wepa-db.net/pdf/0810forum/presentation26.pdf (PDF, Size: 567KB) and http://www.wepa-db.net/pdf/0810forum/paper26.pdf (PDF, Size: 55 KB)

Describes how farmers' perceptions about groundwater determines their willingness to protect groundwater from nonpoint sources of pollution

Andhra Pradesh Farmer Managed Groundwater Systems - Evaluation Report

Report; Andhra Pradesh Farmer Managed Groundwater System; Hyderabad; November 2008

Available at http://www.apfamgs.org/upload/PDF/GCPIND175NET-APFAMGS-eva-final.pdf (PDF, Size: 450 KB)

Explains farmers' understanding of the seasonal distribution of groundwater in their habitations and how they are able to estimate seasonal recharge, draft and balance

Recommended Organizations and Programmes

From Subodh Tamrakar, Rural Environment Development Society, Madhya Pradesh

Rural Environment Development Society, Madhya Pradesh

Brindavan Bag, Gopal Ganj, Sagar 470001, Madhya Pradesh; Tel: 91-07582-235643; sbtamrak@yahoo.com

Works on watershed management projects in Madhya Pradesh, which have led to water conservation, increased productivity and economic gains for farmers in the region

National Rural Employment Guarantee Scheme, New Delhi

Ministry of Rural Development, Krishi Bhawan, New Delhi 110001; Tel: 91-11-23063581, 23034922; Fax: 91-11-23385466; singhrp@sansad.nic.inhttp://nrega.nic.in/guidelines.htm

Provides for 100 days of work to one person from each family below the poverty line, works taken up under the scheme include constructing rainwater harvesting structures

Maharashtra Water Resources Regulatory Authority, Maharashtra(from Sanjay Belsare, Water Resources Department, Nashik, Maharashtra)

9th Floor, Centre - 1, World Trade Centre, Cuffe Parade, Mumbai 400005, Maharashtra; Tel: 91-22-22152019; Fax: 91-22-22153765; http://www.mwrra.org/;

Has allotted water right and finalised new water tariff system based on volumetric supply of water and also provides incentive for economic use of water

From Sunetra Lala, Research Associate

Action for Food Production, New Delhi

25/1-A Pankha Road, D-Block, Janakpuri, New Delhi 110058; Tel: 91-11-28525452; Fax: 91-11-28520343; afprodel@afpro.orghttp://www.afpro.org/services.htm; Contact S. C. Jain; Programme Coordinator; Tel: 91-11-28525412; scjain@afpro.org

Has been supporting community based groundwater management practices, including promoting integrated watershed development programmes

Andhra Pradesh Drought Adaptation Initiative, Secunderabad

H. No. 12-13-450, Street No. 1, Secunderabad 500017 Andhra Pradesh; Tel: 91-40-27015295; Fax: 91-40-27018581; wassan@eth.nethttp://www.wassan.org/apdai/apdai.htm

Promotes appropriate farming systems and natural resource management for better adaptation of the communities to ensure sustainable groundwater availability

Tarun Bharat Sangh, Rajasthan

Tarun Ashram, Bhikampura, Kishoree, Via Thangazi, District Alwar, Rajasthan 301022; Tel: 91-1465-225043; http://www.tarunbharatsangh.org/programs/programs.htm

Promotes sustainable groundwater management in communities and has been involved in promoting rainwater harvesting to augment groundwater resources

Responses in Full 

Subodh Tamrakar, Rural Environment Development Society, Sagar

Our organisation Rural Environment Development Society is working in the Sagar, Damoh and Ratlam districts of Madhya Pradesh on Watershed Management, Roof Water Harvesting and Solid Waste Management. We had implemented a Watershed project in 11 Villages of the Kesli Block of Sagar district from 1996 to 2003.

The Kesli Block is covered by Basaltic rock that is also called Deccan Trap. This rock is hard rock, black in color and non-porous. Secondary porosity is available through joints, scafoliations and variations in different flow of basaltic rocks. Water is available only in the secondary porosity of this rock. Therefore, basalt does not have good homogeneous aquifer and provides water only in pockets. When we had started working in that area, there were few dug wells, the area was low agriculture productive and most of the land was fellow land. During watershed activity we had constructed structures like Staggered Trenches, Contour Trenches, Farm Ponds, Earthen Dams, Gully Checks and Farm bunds.

The Overall effect of all these was increase in subsoil water, ground water recharge and increase in surface water bodies. Because of these effects farmers have developed their fallow land for agriculture, they have started farming near surface water bodies and also changed their cropping pattern from kodo-kutki to soyabean. In this way they have got some economic benefits from water conservation.

We also did Roof Water Harvesting in urban areas for different households in the Sagar and Damoh district of M.P. Now these household are also saving money from not buying water for daily use. These are the field example which shows how we can receive direct or indirect economic incentive from water conservation.

Water Conservation and recharging activity are expensive methods requiring lot of money. The government is investing a lot of money to conserve water through large/medium and small dams through different schemes. The government is also providing funds for construction of farm bunds, farm ponds and talaabs (earthen dam) from the Mahatma Gandhi National Rural Employment Guarantee Scheme. The government is also providing fund for construction of farm pond from the agriculture department. These schemes are for rural areas.

In urban areas different state government are providing tax incentives on construction of Roof Water Harvesting Structures. These are the direct incentive to public from the government. Indirect incentives are an increase in crop production and availability of more water for their use.

India is facing acute shortage of water because of over-exploitation and non-judicious use of water. We can divide major user into three sector

i)                 Agriculture Sector

ii)               Urban Population

iii)              Industrial Sector

The government has to make rules and regulations with public consensus for judicious use of water. For example, in agriculture the use of water should be according to crop requirements and its area. If more water is going to be used, then some charges could be imposed on farmers. In urban area water use increased from 70 litres per capita to 100-200 litres. Therefore, the Urban Local Body needs to fix the quantity of water per capita for daily use. If families use more than this quantity they must pay high charges for water which should be much more than normal charges. For this the ULB has to fix water meters in every household. In the same way there should be some limitation for industrial use, above which industry should have to pay more money to the government.

Nitya Jacob, United Nations Children’s Fund (UNICEF), New Delhi

Depleting groundwater levels force farmers to switch from cheaper surface mounted centrifugal pumps (costing around Rs 20000-25000) to expensive submersible pumps (costing around Rs 1 lakh at least). However, at most state governments provide electricity to rural areas at highly subsidized rates or even free, farmers do not bear the full costs of pumping water from greater and greater depths. Madhya Pradesh, according to a report (Deep Wells and Prudence: Towards Pragmatic Action for Addressing Groundwater Overexploitation in India , The World Bank, 2010) groundwater development stands at 48 per cent. Rice, wheat and sugar cane are grown on 86 per cent of the state’s cropped area and groundwater is used to irrigate 64 per cent of the farms. The state has 2.77 million wells (2006 figures).

The report cites the example of the Jyotirgram scheme in Gujarat . Started in 2003, the state separated electricity feeders for agriculture and non-farm uses in rural areas. The aim was to provide an agreed, reliable power supply for eight hours to farmers. Farmers agreed since reliable power is preferable, even if for a few hours, as long as it meets their needs for irrigation. The scheme has improved the rural quality of life, raised non-agricultural incomes, led to more efficient use of power and groundwater for agriculture, reduced use of power by farmers by 37 per cent and drawdown of groundwater. However the informal water markets that provided water to small farmers have shrunk.

Pricing is a substitute for legal enforcement of groundwater conservation because it can encourage people to be more efficient in using this resource. However, collection and enforcement has been found difficult where there are many users and governance is poor. It has been more effective in creating incentives to move towards higher-value uses, for example horticulture instead of growing grains. Maharashtra has a model that involves the use of its 1.5 million tubewells, levy on groundwater and ban on deep tubewells. Before setting up a pricing system, it is necessary to establish groundwater rights; if this is not done properly, sellers will be encouraged to extract more groundwater. In a situation where there is a large number of small farmers who own tubewells, this can be best implemented by the users. This points to the need for a community self-governance model.

Ramakrishna Nallathiga, Centre for Good Governance, Hyderabad

It is good to note that economic incentives for conserving water are looked upon as a means to provide effective action by the community. There are several studies that imply the decline of groundwater and degradation associated with it.

Attached is a document showing the costs of ground water decline and degradation in NCT-Delhi estimated using environmental economic methods. (http://www.solutionexchange-un.net.in/public/wes/cr/res-22121001.pdfPDF, 1 Mb) 

However, when it comes to action, they are supportive of/lead to policy or regulatory action rather than mooting a strong community action (read the 'tragedy of commons' rationality attached to the lack of collective action).

Nevertheless, based on the studies at a decentralised/micro-level, a committed organization can moot collective action, for which (a) the community should see the need i.e., it should understand benefits > costs and (b) the costs of mobilising community are borne. 

D V Deshpande, NABARD, Mumbai

A watershed approach following the 'ridge to valley' method or even construction of small check dams (as constructed in large numbers in Gujarat) can help in the recharge of groundwater. Various studies have shown that due to watershed work, groundwater improves. Some information is available on NABARD website at this link http://www.nabard.org/farm_sector/devp_maha.asp.

A paper by Reddy et al is also available at the link http://www.tucson.ars.ag.gov/isco/isco13/PAPERS%20R-Z/REDDY.pdf. In India , especially in Chhattisgarh, rain fall is not low but the use of water (mainly for agriculture) is not judicious hence shortages are being felt. Water needs to be treated as a community resource and not private property – the experiment of Pani panchayats of Maharashtra may be referred to. water budgeting is a good idea at local community level and persuading the community to follow the disciplined use of water.

M P Swarnkar, MPCON, Indore

Many thanks for starting the debate on the burning topic of conservation of potable water. At present I am working as senior consultant in MPCON - a TCO promoted by an all-India financial institution. I have working experience of project planning and HRD-training. I have found we are not making proper efforts to save potable water throughout Madhya Pradesh and Chhattisgarh. There should be more Central and state government projects on water conservation to save human and other forms of life in these areas.  During the summer period we are crying for drops of water whereas during rainy season we are careless about water. I feel the state has to make serious efforts to get people to conserve water.

Prabhat Pal, Development Consultant, Jaipur

I would like to endorse Nitya Jacob's suggestion that pricing can be an effective mechanism to promote water use efficiency in the country. The price of any economic good or service should reflect its scarcity value but that's hardly the case with water in the country as farmer only pay for the extraction cost and nothing for water. As one (farmer as well as city dwellers who get highly subsidized water) does not have to pay the real economic price of water, people remain oblivious to its scarcity.

This scenario of free water has led to the current state of 'free for all' with practically non existent state regulations on the extraction of water. Consequently, the resourceful industries and big farmers have been able to privatize what should ideally be a 'common resource' with egalitarian water rights for all.

I feel the state should clearly define water rights in the country and effectively regulate water use in the country while promoting demand side management for efficient use of scarce water resources in the country.

Kulasekaran Srinivasan, Plan India , New Delhi*

The Chennai experience can be good case study to show case how community level water harvesting can bring change not only in improving the water level but also the quality of ground water. In 2003 the state government under a ordinance made rainwater compulsory for all households and the impact is now seen in many parts of the city. A study of Chennai Metrowater shows that there has been a 50 per cent rise in water level in the last five years and the water quality has significantly improved.

The Chennai Metrowater’s study of 759 RWH observatory wells show that ever since the installation of RWH structures in about 5 lakh consumer households was made mandatory in 2003. According to the Metrowater officials, over the last five years, the water level across the city has gone up by three to six metres. Similarly, the water quality in several areas has also showed improvement. 

The sustained normal rainfall since 2004 and the proper maintenance of RWH structures in most households have been the principal reasons. Following the drought period in 2003 when Chennai received only about 690 mm of rainfall as against its normal of 1,200 mm, the water table had receded and, on an average, was at 7-8 metres below ground.

In places like Villivakkam it was at 13 m depth and in Vadapalani, Velachery and Guindy it was at 10 m. Following a good rain (2,064 mm) in 2005 and rainwater harvesting, the ground water table saw an appreciable rise in several areas and the water table reached 1 m depth below ground.

The water level in areas such as Vadapalani and Villivakkam increased and reached 1.30 m below ground and the levels in coastal areas such as Besant Nagar and Santhome rose to 1-2 m. Similarly, the quality of water, which had its total dissolved solids (TDS) as high as 4,900 parts per million (ppm) in areas such as Chintadripet, dropped to permissible levels of 500 ppm.

Before the onset of every monsoon, the Metrowater officials conduct a random check of the RWH structures for their maintenance and create awareness about the need for maintenance. These have paid rich dividends.

*Offline Contribution

Sanjay Belsare, Water Resources Department, Nashik, Maharashtra*

I agree with devising water tariff system such that it act as economic instrument to make efficient use of water and wasting scare water resource. Maharashtra has made beginning in this direction by giving water right and almost finalizing new water tariff system based on volumetric supqply and giving incentive for economic use of water. Maharashtra has established Maharshtra water resources regulatory authority who is doing job of water pricing and giving water entitlement. You get more details on www.mwrra.org

*Offline Contribution 

Many thanks to all who contributed to this query!

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by
2 February 2011