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

A. Banerji, J.V. Meenakshi and Gauri Khanna

Journal of Development Economics, 2012, vol. 98, issue 2, 228-237

Abstract: 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.

Keywords: Water markets; Market structure; Social contracts; Water pricing (search for similar items in EconPapers)
JEL-codes: L1 Q1 Q2 (search for similar items in EconPapers)
Date: 2012
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Working Paper: SOCIAL CONTRACTS, MARKETS AND EFFICIENCY -- GROUNDWATER IRRIGATION IN NORTH INDIA (2010) Downloads
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