This originally appeared on the 3ie blog.
A 3ie-supported study shows that, in water-abundant West Bengal, price-based reforms reduced costs for tube well owners but increased them for small farmers buying water. Recommendations from the study to reduce red tape and costs for small farmers to acquire electric pumps were adopted by government.
Irrigation makes higher yields possible, affording a second or even third season of crops. But water is generally scarce and so rapid growth of tube wells has raised concerns about sustainability. Pricing of both water, and electricity for agricultural purposes, are increasingly being used to ensure water resources are being used more efficiently.
West Bengal began electric metering of agricultural consumers in 2007. Tube well owners were charged on the basis of usage instead of the previous flat tariff.
The International Water Management Institute was commissioned to study the impact of this policy change. The study found that the groundwater market which had flourished in rural areas shrunk. Smaller farmers had to pay more for their water, many turning to more expensive diesel irrigation or watering by hand. This was an unintended and unexpected negative impact of the reform on poorer families.
The impact evaluation made two important recommendations. “Based on our research, we suggested that the authorities scrap the permit system for small pumps,” said study lead author Dr. Aditi Mukherji. “The existing system was not really appropriate in a region where agricultural water scarcity is rare. Groundwater aquifers in West Bengal are regularly replenished by monsoon rains and their productive use should be encouraged.” The second recommendation was to introduce a fixed electricity connection fee for tube wells. “Previously farmers had to pay for the full cost of wires, poles and transformers; something that most urban customers did not have to do,” says Dr. Mukherji. “This was prohibitively expensive for many smaller farmers, especially if they were far from the existing electricity supply line.”
The evidence from the study was presented to the new state government that assumed office in 2011. The government amended the West Bengal Groundwater Resources (Management, Control and Regulation) Act 2005 in November 2011 thereby removing the need for the clearance certificate. And the West Bengal State Electricity Distribution Company also passed a policy resolution declaring that it would award electricity connections to farmers against a fixed connection fee.
This case study is a demonstration of 3ie’s theory of change, whereby research provided policymakers evidence of the impact of metering of tube wells and thus enabling them to introduce vital policy changes. The case also shows how context matters for impact and so for policy. Whilst water pricing may the right policy for much of India, and other countries with scarce water, it will not always be so.