Irrigation Water Pricing in India as a Means to Conserve Water Resources: Challenges and Potential Future Opportunities

Groundwater forms the mainstay of agricultural irrigation in India, supporting over 50% of the total irrigated area and 70% of crop production, providing livelihood opportunities to half the population (World Bank 2010). But uncontrolled overuse of groundwater resources has accelerated widespread water-table declines (Rodell et al. 2009). Globally, groundwater depletion rates in India are now the highest (Aeschbach-Hertig & Gleeson 2012). Depletion of groundwater reserves has raised critical concerns over sustainable irrigation supply, food security and ecosystem services loss. Instituting a water-pricing framework for irrigation could help to regulate groundwater use and conserve dwindling water reserves. The need becomes more compelling as over 250 districts in 11 states are prone to recurrent drought events (Table 1), leading to acute water scarcity, crop damage, economic losses and livelihood crises. Here, we summarize the current irrigation water-pricing practices in India in an attempt to understand the key deterrents to effective water resources management and to outline potential future directions. There is as yet little effort to price groundwater, even though it furnishes the bulk of irrigation water demand. Land area under groundwater-sourced irrigation has soared from c. 29% of nationwide net irrigated area in 1960–1961 to c. 62% in 2012–2013 (GoI 2014), while surface-sourced irrigation dropped from c. 42% to 23%. Several factors contributed to this ‘transition’: (1) growth in rural population density; (2) boom in smallholder farms (<2 ha); (3) increased demand for year-round, on-demand water supply; (4) inefficient institutional governance (incomplete projects, poor maintenance of infrastructure, low public investment) of canal-sourced irrigation; (5) energy subsidies to pump groundwater; and (6) new irrigation methods (Amarasighe et al. 2009). However, water pricing still mostly applies to canal-sourced systems. Even then, there is considerable regional variation in levying the rates (Table 1) (CWC 2017). In the states of Haryana, Rajasthan and Punjab, where water-level declines are greatest in India, irrigation water pricing levels are among the lowest for paddy and do not apply to groundwater. Spatially uniform rates (maximum=minimum) apply to wheat and sugarcane in 14 and 9 states, respectively (Table 1). In Punjab, Himachal Pradesh and Tripura, spatially uniform and flat rates apply to all three crops. In Goa, Gujarat, Jammu and Kashmir, Karnataka, Assam, Maharashtra and Orissa, the same applies to two varieties. Certain states have no pricing system at all. Ideally, irrigation water pricing should be keyed to: (1) type of crops (food vs. cash) and crop water requirement; (2) type of irrigation method (gravity, lift, drip/sprinkler); (3) land character (wet vs. dry); (4) financial capacity of farmers; (5) scale of irrigation project (large, medium, small); and (6) water resources vulnerability (Kulkarni 2007). However, there is little consistency in application of these factors. A prime issue in implementing a robust water pricing system in India is the lack of periodic revisions of rates (Table 1). Revisions should be based on regional hydro-climatic traits, live reservoir capacity and recharge pattern. In addition, distinctions have to be made between irrigation and non-irrigation usage. Most irrigation projects produce diminishing returns (Sindhu 2010). Optimum levels of irrigation water pricing rates should be, according to the Irrigation Commission of India, 5% of gross income for food crops and 12% for cash crops. In practice, water fee receipts have only been 2.9% at most for both types. Percentage recovery of working expenses of irrigation projects via irrigation water tariffs (‘gross receipt’) has been variable but consistently poor over time nationwide (<20% recovery) as well as for certain states (<30% recovery) known for appalling groundwater depletion (Fig. 1) (CWC 2017). In a vicious cycle, poor financial recovery leads to poor operation and maintenance of irrigation infrastructure, poor investment in irrigation projects, more economic losses and, eventually, reduced opportunities for implementing irrigation water pricing. Environmental Conservation