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This working paper presents the results of a comprehensive groundwater survey of Pakistan, designed to understand the dynamics of groundwater use, operation and maintenance patterns, socio-economics of groundwater irrigation, land use pattern, crops, yields, and groundwater irrigation practices. For this survey, Pakistan was divided into 83 nodal intervals, with each node covering an area of 100 km*100 km; and one village from center of each grid was selected as sample. From each sample village, 15 tubewell owners were randomly selected as respondents. In total, 1200 private tubewell owners were interviewed for this study. The distance between two sample villages was kept more than 40 kilometers. This was done to avoid influences of one-village activities on the other.
This paper presents the results of a study on water markets in the Fordwah/Eastern Sadiqia Area, Punjab, Pakistan. The study stresses and quantifies the importance of water markets in the area. A first attempt is made to evaluate the the impact of water marketson the quality of irrigation services.
Evidence from Pakistan's Punjab indicates that monopoly power in the market for groundwater (irrigation water extracted using private tubewells) results in a substantial resource misallocation. But despite this substantial misallocation of groundwater, a welfare analysis shows that monopoly pricing of groundwater has limited effects on equity and efficiency. Policies aimed at eliminating monopoly pricing would do little to help the poorest farmers.
Markets for Water: Potential and Performance dispels many of the myths surrounding water markets and gives readers a comprehensive picture of the way that markets have developed in different parts of the world. It is possible, for example, for a water market to fail, and for the transaction costs in water markets to be excessive. Too often water trading is banned because the water resources have been developed with public funds and the water agencies do not want to lose control over water. There is also a concern that poor farmers or households will be disadvantaged by water trading. These concerns about public resources and the poor are not very different from those that have been voiced in the past about land sales. The problem is that in many cases the poor already have limited access to resources, but this limit is not due to water trading. In fact, water trading is likely to expand the access to water for many small-scale farmers. Markets for Water: Potential and Performance provides an analytical framework for water market establishment. It develops the necessary conditions for water markets and illustrates how they can improve both water management and economic efficiency. Finally, the book gives readers an up-to-date picture of what we have learned about water markets in a wide range of countries, from the US to Chile and India.
Pakistan’s water management is at a critical watershed. The world’s seventh-most populous country faces serious challenges that will require improvements in both the "hardware" and "software" of agricultural water management. Water shortages are growing rapidly as a result of growing demand across all water-using sectors. Rapid population growth, from 175 million people in 2010 to an estimated 236 million by 2030 and 280 million by 2050, and international food-price spikes create pressure to increase agricultural production of staples; but demand for cash crops is also growing rapidly, including for cotton, fruit trees and tobacco, to raise rural incomes and generate rural employment to absorb the relatively young, rapidly growing rural population. Water management is also increasingly affected by climate change – including an increased number of flood and drought events – and growing energy shortages, which affect how water is being sourced and used. Last but not least, Pakistan’s political situation is fragile, which has reduced incentives to invest in enhanced agricultural water (and other) technologies. How Pakistan addresses these challenges will be decisive for its population’s future water and food security, for economic growth, and for environmental sustainability. It will also affect water and food outcomes globally, due to the interconnectedness of global food trade. This book was published as a special issue of Water International.
Evidence from Pakistan's Punjab indicates that monopoly power in the market for groundwater (irrigation water extracted using private tubewells) results in a substantial resource misallocation. But despite this substantial misallocation of groundwater, a welfare analysis shows that monopoly pricing of groundwater has limited effects on equity and efficiency. Policies aimed at eliminating monopoly pricing would do little to help the poorest farmers.Using data from Pakistan's Punjab, Jacoby, Murgai, and Rehman examine monopoly power in the market for groundwater - irrigation water extracted using private tubewells - a market characterized by barriers to entry and spatial fragmentation. Simple theory predicts that tubewell owners should price-discriminate in favor of their own share tenants. And this analysis of individual groundwater transactions over an 18-month period confirms such price discrimination.And among those studied, tubewell owners and their tenants use considerably more groundwater on their plots than do other farmers. Jacoby, Murgai, and Rehman also provide evidence that monopoly pricing of groundwater leads to compensating - albeit small - reallocations of canal water, which farmers exchange in a separate informal market. Despite the substantial misallocation of groundwater, a welfare analysis shows that monopoly pricing has limited effects on equity and efficiency. In the long run, a policy aimed at eliminating monopoly pricing would do little to help the poorest farmers.This paper - a product of Rural Development, Development Research Group - is part of a larger effort in the group to examine the role of policy and policy reform on rural development. The study was funded by the Bank's Research Support Budget under the research project Market Development and Allocative Efficiency: Irrigation Water in the Punjab.