Economic value of groundwater: case studies from four villages in Banaskantha, north Gujarat

Article type: Research Article

Authors: Kumar, M Dinesh | Singhal, Lokesh | Rath, Pabitra

Abstract: Though groundwater markets exist widely in north Gujarat and the selling price is often considerably high, reflecting the scarcity value of the resource, the question often asked by policy-makers is whether the scarcity value is realized under the existing uses such as irrigation and milk production. This is because farmers who own tube wells and enjoy unlimited access to the resource, are not fully confronted with the opportunity cost of using water due to heavily subsidized electricity, and divert the water for growing crops that are economically inefficient. A study carried out in four villages in Gujarat’s Banaskantha district estimated the marginal value product of groundwater use to be 32.4 million rupees. A major share (60%) of the net farm output generated through groundwater use in agriculture came from dairying.

DOI: 10.3233/RED-120013

Journal: Journal of Resources, Energy and Development, vol. 2, no. 1, pp. 1-18, 2005