Environment, Development and Sustainability (2020) 22:5731–5749

https://doi.org/10.1007/s10668-019-00448-8

An evaluation of groundwater institutions in India:

a property rights perspective

Jayanath Ananda1   · Mohamed Aheeyar2

Received: 4 October 2018 / Accepted: 11 August 2019 / Published online: 21 August 2019
© Springer Nature B.V. 2019

Abstract
Groundwater governance has become an intractable policy issue, which has many impli-
cations for the living standards and well-being of millions of rural poor in South Asia.
Groundwater governance is complex as it is influenced by various hydrogeological, soci-
opolitical and socioeconomic factors. Unregulated groundwater extraction rates in South
Asia have depleted the aquifers causing a raft of socioeconomic, environmental and human
health problems. This paper analyzes de facto rights in groundwater markets and other
emerging ‘groundwater-sharing institutional arrangements’ in India. Using a multi-dimen-
sional property rights model, the paper decomposes de facto groundwater rights while
drawing insights and broad policy lessons. The findings indicate that there is much scope
for enhancing the ‘small group groundwater sharing’ governed by social regulatory meas-
ures. Moreover, distortionary subsidies for agriculture in general and groundwater devel-
opment, in particular, have had an adverse impact of the resource use and merit further
attention.

Keywords  Governance · Markets · Water sharing · Social regulation · Transaction costs ·

South Asia

JEL Classification  D23 · Q22 · Q25 · Q15 · D62 · H41

1 Introduction

Groundwater plays a critical role in irrigated farming, livelihood support and poverty alle-
viation in many developing regions including South Asia (Villholth et  al. 2009a; Bassi
2014). Alarming groundwater depletion and degradation threaten the sustainability of

* Jayanath Ananda
j.ananda@cqu.edu.au
Mohamed Aheeyar
M.Aheeyar@cgiar.org
1
School of Business and Law, Central Queensland University, 120 Spencer Street, Melbourne,
VIC 3000, Australia
2
International Water Management Institute, 127 Sunil Mawatha, Pelawatte, Battaramulla, Colombo,
Sri Lanka

13
Vol.:(0123456789)
 5732 J. Ananda, M. Aheeyar

this valuable renewable resource in the Indian subcontinent1 (Kumar et al. 2018). Twenty-
one of the world’s 37 largest underground aquifers including the ones in South Asia have
passed their sustainability tipping points (Richey et  al. 2015) causing a raft of socioeco-
nomic, environmental and human health problems. In India, groundwater extractions have
reached unsustainable levels due to a rapid expansion of groundwater irrigation (Shah
2009b). For example, the explosive growth in groundwater use in India resulted in a tenfold
increase in extraction between 1950 and 2013 while Bangladesh became a net exporter
of rice from a net importer through rapid groundwater development (International Water
Management Institute 2013). The number of private wells in India has crossed twenty mil-
lion and is increasing at a rate of one million wells per year with the new one being dug at
every 15 s (Mukherji and Shah 2005; Reddy et al. 2014; International Water Management
Institute 2014). Yet, the groundwater governance in the region is in a state of flux and
remains less understood (Jacoby 2017; Kumar et al. 2018). Crafting efficient, equitable and
sustainable groundwater institutions that can control the unsustainable groundwater extrac-
tion rates has been a ‘wicked’ policy problem.
The conventional water governance approaches have been challenged, and new narra-
tives emphasizing locally diverse approaches have been emerging (Woodhouse and Muller
2017). Undoubtedly, groundwater governance issues cannot be dealt with ‘straightjacket’
solutions because of several reasons. First, the ‘fugitive’ and ‘invisible’ nature of the
resource and relatively high cost of assessing groundwater conditions make it difficult to
understand the gravity of the issue. Klümper et al. (2018) highlight the challenge of dealing
with perceived land and water rights. Secondly, highly decentralized nature of the resource
increases the management and monitoring costs. Thirdly, from an Indian view, the scale
and the sheer number of groundwater users involved (Shah et al. 2001) make it an intrac-
table policy problem. Fourthly, the heterogeneous aquifer and hydrogeological conditions
(shallow and deep circulation) engender peculiar behavioral responses among groundwater
users (Shah 2009a). Fifthly, exogenous factors such as climate change, population growth
and a myriad of problems associated with surface irrigation schemes not only exert a con-
siderable pressure on the groundwater resource but also complicate the groundwater issue.2
Above problems are exacerbated by a lack of reliable temporal and spatial data on the
groundwater potential, current extraction rates and the behavior of the aquifer itself.
Many problems associated with groundwater governance are intrinsically related to the
existing system of groundwater ‘rights’ (Veeman 1978) or rather the absence of clearly
defined property rights (Reddy et  al. 2014). Well-defined de jure groundwater rights do
not exist in India, and de facto groundwater rights are tied to the land rights. It is mislead-
ing to say that there are no property rights to groundwater in the subcontinent because in
most parts, private groundwater rights exist to those who own land. However, these private
rights of groundwater ownership and use are indefinite for the landholder because neigh-
boring pumpers may take possession of the mobile resource (Veeman 1978).
Many scholars argue that the absence of well-defined groundwater rights as a major
source of uncertainty leads to unsustainable use (Kumar 2003; Singh 1994). They are
critical to control over-abstraction of groundwater (Kemper 2007; Bhatia 1992; Singh
1994; Kumar et al. 2013; Saleth 1994). What is not discussed adequately in the literature
is how to define groundwater rights in order to reduce tenure uncertainty, which leads to

1
  The terms ‘Indian subcontinent’ and ‘subcontinent’ are used interchangeably in this paper.
2
  Farming systems, saltwater intrusions and dumping of pollutants and waste also exert pressure on aqui-
fers.

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An evaluation of groundwater institutions in India: a property… 5733

sustainable rates of abstraction. By examining how various direct and indirect policy and
institutional interventions impact on the exclusivity dimension of the groundwater right,
one can ascertain the performance of that intervention in terms of its scope for efficiency
and sustainability.
Despite considerable challenges, the creation and enforcement of some form of ground-
water rights and institutional mechanisms are now being increasingly advocated (Bassi
2014; Singh and Singh 2003; Vadivelu 2011; Kumar 2000) as indirect measures to regu-
late groundwater met with little success (Bassi 2014). Saleth (1997) argued that even an
imperfect system of groundwater rights could produce benefits than perfectly designed
power tariff structures. Narain (1998) goes a step further and makes a case for separating
de facto rights in groundwater from rights to land overlying it and conferring de jure rights
in groundwater to local communities.
In view of the challenges in the formulation of effective policy solutions to manage
groundwater, this paper focuses on the nature of groundwater rights that exist in various
institutional configurations.3 Specifically, the paper aims to analyze de facto groundwater
rights underpinning the informal groundwater markets and other emerging ‘groundwater-
sharing institutional arrangements’ in India. The paper acknowledges the considerable bar-
riers that currently exist in establishing tradable groundwater rights in India and does not
advocate a sole solution based on water rights per se. Rather, the intention is to understand
the current groundwater governance regimes through the lens of property rights theory in
order to identify and promote the second-best solutions, which can enhance both efficiency
and equity considerations.
This paper makes three distinctive contributions to the existing literature. First, it com-
prehensively surveys groundwater governance models in the Indian subcontinent, which
characterizes a great deal of groundwater institutional diversity. Second, it analyzes various
groundwater governance models in India using a multi-dimensional property rights frame-
work, which helps in delineating various governance models. Third, it argues for interim
groundwater governance models because the transitioning to a more formal groundwater
rights system may be premature for South Asia, particularly in India, given the current dis-
tortionary policies and the lack of institutional capacity to provide an overarching decision-
making support based on science. What is missing in the debate are the transitioning and
enabling mechanisms for South Asian groundwater economies to adopt more sustainable
groundwater governance regimes in the interim. This paper attempts to fill that void by
contributing to the groundwater institutional development literature.
The rest of the paper is organized as follows. The next section provides a conceptual
framework based on Scott’s (1989) property rights dimension model, which focuses on the
degree of attenuation in property rights. A snapshot of groundwater use trends in South
Asia and salient features of groundwater governance are discussed next. This is followed
by an application of the framework to selected groundwater governance models in India. In
the next section, the policy implications arising from the preceding analysis are discussed
by drawing lessons for groundwater development and governance in countries such as Sri
Lanka where the groundwater development is at an early stage. The final section offers
some concluding comments.

3
  The distinct asymmetry in groundwater knowledge with regard to institutional and user perspectives has
been highlighted by scholars (Mukherji and Shah 2005).

13
 5734 J. Ananda, M. Aheeyar

Fig. 1  Property rights dimen- Flexibility

sions. Adapted from Scott (1989) 1
0.8
0.6
Duration Exclusivity
0.4
0.2
0

Divisibility Quality of title

Transferability

2 Conceptual framework

The property rights perspective offers a formidable explanation to water allocation and
exchange problems. Property rights, in general, refer to a bundle of entitlements defin-
ing the owner’s rights, privileges and limitations for use of a resource (Tietenberg 2006).
Bromley (1989, p. 202) defines property rights as a social relation among individuals
within a society rather than a relationship between an individual and a particular object of
value.
A useful framework for analyzing alternative institutional arrangements involves con-
ceptualizing them as a bundle of entitlements over the resource rather than just ownership
right per se. In this characterization, rights are ‘more about the rights of individuals to
impose restriction on the behavior of others than they are about the ‘ownership’ of the
resource’ (Crase and Dollery 2006, p. 452). Various approaches have been used in the lit-
erature to describe property rights4 (Bromley 1989; Challen 2000; Agrawal and Ostrom
2001).
The characterization of property rights proposed by Scott (1989) provides a useful con-
ceptual framework to analyze de facto groundwater rights. The framework describes sev-
eral dimensions of property rights (Fig.  1). To most people, a ‘property right’ is a right
to land and immovable physical components therein (e.g., soil, resources, buildings, etc.).
The courts of law of most countries recognize standard interests such as freehold, lease-
hold, mining rights and appropriative water rights (Scott 1989). Each of the standard inter-
ests in real property can be identified by the characteristics it combines.
According to the framework by Scott (1989), property rights contain six dimensions:
exclusivity, duration, transferability, divisibility, quality of title and flexibility. Each dimen-
sion can be regarded as continuous rather than discrete and can be represented numeri-
cally.5 Exclusivity stipulates the extent to which other parties can be excluded from the
flow of benefits arising from the resource. Duration specifies the duration over which
the right exists. Obviously, duration is complimentary to the exclusivity characteris-
tic. The ease and the extent to which the right may be transferred are spelled out in the

4
  A comprehensive discussion on various property rights approaches is beyond the scope of this paper.
5
  For the present analysis, we will resort to a qualitative analysis of each dimension.

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An evaluation of groundwater institutions in India: a property… 5735

transferability dimension. Divisibility specifies the degree to which the right can be subdi-
vided. The capacity of the right to adequately describe the resource is represented by the
quality of title dimension. Finally, the flexibility dimension refers to the extent to which the
property rights holder can alter the resource use pattern (Challen 2000).
Since land and water rights are bundled together in South Asia, holding a land right
allows a landholder to legally extract the groundwater beneath. Each discernible insti-
tutional configuration in groundwater use represents a unique configuration of the six
dimensions. The purpose of the analysis is to examine the degree of attenuation of rights
to groundwater users in various institutional configurations. The process of intervening in
new institutional form can be thought of as the process of changing the extent to which
one or more dimensions of the groundwater right are present in the standard interest (Scott
1989).

3 Salient features of groundwater governance in the Indian

subcontinent

This section provides a snapshot of groundwater use and management in South Asia, par-
ticularly focusing on the governance arrangements6 in India. The discussion focuses on the
lower-order institutions and governance measures. Higher-order institutions for groundwa-
ter management are virtually nonexistent or ineffective in the Indian subcontinent.7
The scale of groundwater development is unprecedented in South Asia in general and
India, in particular. In India, groundwater irrigation surpassed canal irrigation in the early
1970s (Bassi 2014). The scale of groundwater exploitation in South Asia in general and
in India in particular is well documented (Bassi 2014; Scott and Sharma 2009; Villholth
et  al. 2009b; Shah 1988, 2009b; Palanisami et  al. 2011). Alarming rates of groundwater
over-exploitation have been reported in the Indian states of Gujarat (Bhatia 1992), Kar-
nataka (Anantha 2013), Andhra Pradesh (Kumar 2007), Rajasthan (Singh 2002), Punjab
(Sharma et al. 2010; Kaushal 2009). Over-exploitation of groundwater in Pakistani Punjab
and Balochistan regions has also been reported (van Steenbergen and Oliemans 2002). The
number of irrigation wells in Punjab has doubled in Pakistani Punjab from 1994 (0.41 mil-
lion) to 2004 (0.82 million) (Jacoby 2017). Figure 2 shows the groundwater use intensity
in selected South Asian countries. Figure  2 also shows the rapid growth in groundwater
extraction for selected South Asian countries from 1940 to 2010. The exponential growth
in groundwater development in India since 1960 is particularly noteworthy.

3.1 Unbundling land and groundwater rights

Establishing de jure groundwater rights is a highly polarized issue, which has been widely
debated in the literature.8 The difficulty in defining and enforcing groundwater rights rep-
resents the crux of the groundwater governance problem in the Indian subcontinent. The

6
  See Shah (2009b) for a comprehensive discussion of groundwater governance in South Asia.
7
  A review of higher-order groundwater governance arrangements in South Asia is beyond the scope of this
paper.
8
  Though difficult in practice, the merits of establishing tradable property rights have been widely pub-
lished (Rosegrant and Gazmuri 1994).

13
 5736 J. Ananda, M. Aheeyar

Fig. 2  Groundwater extraction in
selected South Asian countries,
1940–2010. Source: Modified
from Shah (2009b, p. 37)

heterogeneity in the land ownership and discrepancies in financial capabilities among land-
owners have resulted in differences in perceptions about the nature of groundwater rights
(Libecap 1997). Moreover, weak or the complete absence of higher-order institutions to
manage groundwater also poses a great threat to the sustainability of the resource and
the livelihoods that depends on it (Kemper 2007). The institutional vacuum in managing
groundwater combined with a lack of well-defined groundwater rights has contributed to
its unsustainable use (Bassi 2014; Narain 1998; Kumar 2000).
Despite the absence of a codified groundwater right system, complex informal ground-
water markets dominate the subcontinent’s agrarian landscape (Kemper 2007; Mukherji
2007b). Groundwater markets play an important role in South Asia with about 88% of
pump owners reporting selling water in Bangladesh, 60% in Nepal and 60% in West Ben-
gal (Mukherji and Shah 2005). These informal groundwater markets in India, Pakistan and
Bangladesh have contributed to food security, increased agricultural productivity (Amar-
asinghe et al. 2007; Mukherji and Shah 2005; Shah et al. 2008a, b) and poverty alleviation
in these countries (Shah 1993, 2009a; Villholth et al. 2009a) by enhancing the access to
irrigation for the rural poor (Shah 1993, 2009a, b).
The limitations of highly informal groundwater markets, poorly resourced regulatory
frameworks (International Water Management Institute 2014) and the difficulties of estab-
lishing tradable groundwater rights have been highlighted in the literature (Shah 2009a;
Qureshi et  al. 2010). Particularly, they have been criticized for bringing about less than
equitable outcomes and causing groundwater over-exploitation (Mukherji 2007b) although
some studies show that water trade results in efficient water allocation across farms
(Banerji et al. 2012).

3.2 Groundwater–energy nexus

Various reasons are attributed to the rapid expansion of groundwater use for irrigation.
Multiple demand factors such as farmer investment, subsidies and groundwater markets,
increasing population density as well as supply factors such as sources of groundwater
recharge and energy supply and pricing affect the sustainability of groundwater (Scott and

13
An evaluation of groundwater institutions in India: a property… 5737

Sharma 2009). However, no other intervention had impacted the development of ground-
water resources and the rates of extraction than the electricity subsidy. Shah et al. (2007,
2008a) and Mukherji (2007b) highlighted the use of electricity policies to regulate ground-
water abstraction in India. Various poverty alleviation programs have contributed to the
expansion of tube well development. For example, the subsidy for electricity supply to
agricultural tube wells in Balochistan province of Pakistan alone amounted to Rs. 6 billion
in 2011(Khair et al. 2015).
Electricity pricing has a positive effect on groundwater use efficiency and productivity.
For example, Kumar (2005) showed that effective power tariff combined with volumetric
rationing of groundwater could address the unsustainable abstraction levels in India. Shah
et al. (2008b) highlights the success story of the Jyotigram Scheme in Gujarat implemented
in 2003 where previous attempts to regulate over-exploitation of groundwater had been
unsuccessful. By providing a separate electricity feeder line worth of US$ 290 million to
the irrigators, the scheme not only effectively rationed groundwater usage (8 h a day) but
also increased the water prices by 30–40% (Shah et al. 2008a). Several unintended spin-
offs of strict agriculture power supply rationing included the improvements to the village
quality of life through the three-phase electricity (unrestricted) supply to domestic and
industrial users which drove the nonfarm economic enterprises in addition to the reduced
groundwater exploitation (Scott and Shah 2004). However, Shah et al. (2008a) noted a det-
rimental effect of consumption-based electricity tariff on the marginal and landless farmers
who predominantly depend on groundwater markets. Evidence also indicates that ration-
ing electricity without metering and unit pricing has failed to instigate efficient electricity
and groundwater use (Kumar 2005; Bassi 2014). Undoubtedly, these policy options involve
prepaid metering of electricity in remote rural areas and related transaction costs but there
are significant opportunity costs of not doing so (Kumar et al. 2011).
The experience from Gujarat and elsewhere suggests that indirect regulation is a power-
ful tool to regulate groundwater with some caveats. The replication of the Jyotigram Yojana
scheme elsewhere may be limited mainly because of its highly context-specific nature and
strong path dependencies involved. Free or subsidized electricity supply is not a universal
feature in South Asia. Even in the presence of energy subsidies, separate feeder lines to
agriculture may not be economically feasible elsewhere without the scale economies.
The success of curtailing rapid groundwater extraction using electricity pricing in India
has not been felt in the rest of South Asia. The obvious reason is that the contextual setting
prevailing in Gujarat in particular is unique. Availability of grid electricity at the farm level
and tariff structures is also critical to such indirect policy options. For example, in Paki-
stan, electricity pricing had been tried as a regulatory level to arrest groundwater overdraft
with little success. The main reason is the availability of substitute energy, which lowers
the switching costs from electricity. In fact, electric tube wells cover only 20% of the total
groundwater abstraction in Pakistan today (Qureshi et al. 2010). Other indirect instruments
include agricultural produce pricing, trade policies (Kemper 2003) and fertilizer subsi-
dies for crops produced using groundwater.9 In other words, indirect regulation, rationing
energy cannot be regarded as a panacea for groundwater governance.
Introduction of new technologies to GW irrigation has direct effect on the degree of
groundwater use. For example, solar energy pumps in Rajasthan and micro-irrigation
technologies in the Indian subcontinent have accelerated the groundwater extraction

9
  The type of crop grown, whether it is water-intensive paddy, a perennial crop or cash crop, also has a
bearing on the groundwater use intensity.

13
 5738 J. Ananda, M. Aheeyar

considerably (Kishore et al. 2014). Subsidizing solar energy pumps may have an effect
similar to the electricity subsidy because once the initial investment has been made,
operating costs would be minimal in solar energy pumps. The penetration of sprinkler
irrigation in Kalpitiya, Sri Lanka, has motivated farmers to carry out year-round cultiva-
tion, which has increased the level of groundwater abstraction.

3.3 Groundwater markets

Providing certainty of groundwater supply by means of continuous rural electrification

and high flat tariff rates could support the groundwater markets and access to irriga-
tion for the marginalized farmers (Mukherji 2007a). Evidence from the hard rock areas
of India suggests that groundwater markets not only improve the efficiency of water
use but also provide resource-poor farmers access to irrigation water, giving them the
opportunity to raise their productivity (Manjunatha et  al. 2011). Groundwater markets
also appear to improve cropping patterns by shifting to high-value crops as evidenced
in upland Balochistan (Khair et al. 2012). That said unfettered groundwater markets do
not necessarily mean that sustainable use is guaranteed. For example, Packialakshmi
et al. (2011) highlights the adverse impacts of informal groundwater markets in Tamil
Nadu on the per-urban and urban water security. Contrary to the established notion that
scarcity of water would lead to its prudent use, Varghese et al. (2013) found competitive
groundwater appropriation by rice farmers in South India in the face of increasing scar-
city. Among the policy options to enhance local collective action in groundwater man-
agement, pricing policies appear to be effective and have modest effect on farm profit-
ability (Shiferaw et al. 2008).

3.4 Groundwater use rights

Rights-based approaches such as permits, licensing and groundwater entitlements are

often classified under the common umbrella of groundwater use rights (Kemper 2007).
Nagaraj et al. (1999) proposed establishing water resource districts, specifying ground-
water user rights and permits for extraction and quotas and moratoria on new wells in
critical areas. Groundwater licensing has been attempted in several states of India with
little success. Pahuja et al. (2010) highlighted the potential of community groundwater
management as a means to arrest the over-exploitation. Singh (1994), citing the histori-
cal success, argued for the establishment of cooperative property rights for groundwater
management in arid, semiarid and hard rock areas of India. Based on a community-
managed groundwater initiative in Gujarat, western India, Kumar (2000) advocates the
establishment of tradable property rights to groundwater in order to ensure efficiency
and sustainability use of resources. More research is needed to better understand the
enabling mechanisms to improve the current private and group de facto groundwater
rights.

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An evaluation of groundwater institutions in India: a property… 5739

3.5 Managed aquifer recharge

One of the most widely used supply-side interventions in groundwater management is

the active management of aquifer recharge. Managed aquifer recharge (MAR)10 is a more
systematic and organized way to enhance groundwater recharge (Shah 2014b) in areas
facing problems of overdraft. This is essentially a supply-side initiative and can be done
by retaining runoffs, building physical structures, forest conservation, afforestation, rain-
water harvesting and artificial recharge (Pandey 2014). The initiative has been tried in
many parts of India, mostly with decentralized, community-driven initiatives but thus far
yielded mixed results (M.D. Kumar 2005; Shah 2014b) perhaps with a few exceptions. In
Andhra Pradesh, FAO sponsored Farmer Managed Groundwater Systems (APFMGS) pro-
ject involving 700 village communities in monitoring groundwater behavior and carrying
out collective farm planning (Shah 2014a). It is contended that the APFMGS project has
achieved a closer alignment of water availability and water use without sacrificing the farm
profitability (Pandey 2014). Much of the variation in MAR results and the farmer enthusi-
asm or lack thereof can be largely attributed to the hydrogeology. For example, community
efforts of MAR in hard rock areas of Saurashtra thrived while they were limited in the
North Gujarat’s porous and permeable alluvial aquifer areas where depletion and pumping
costs were high (Shah 2014b).

3.6 Conjunctive use of groundwater and surface water

Dhawan (1986) illustrated empirically the benefits accruing to groundwater investment

from seepage from canal networks and tanks in Ahmednagar District, Western Maha-
rashtra. The role of surface water sources, tanks in particular, has been noted in aquifer
recharge. Anantha (2013), using field-level data in Karnataka, concluded that institu-
tional reforms are needed to restore surface water bodies so that aquifer recharge can be
facilitated.

4 Economic analysis of the performance of the de facto groundwater

rights (governance) in India

An application of Scott’s (1989) model to groundwater governance arrangements in India is

presented in this section. Figure 3 provides an overview of groundwater rights for selected
groundwater governance models using the six property rights dimensions discussed earlier.
It diagrammatically unbundles the attenuation of rights for the governance models evalu-
ated. It should be noted that this is only a literature-based qualitative evaluation and points
closer to the end of axis show less attenuation, whereas points closer to the origin sym-
bolize more attenuation of rights along the six dimensions discussed earlier. The specific
details of the position of each property rights dimension are presented in Table 1. The anal-
ysis reveals that there is a considerable variation in the level of attenuation of groundwater

10
 The term refers to a set of techniques ranging from community-built and managed structures (check
dams) to trap surface water to aquifer storage and recovery (ASR) systems such as groundwater replenish-
ment practiced in advanced countries.

13
 5740 J. Ananda, M. Aheeyar

Flexibility
1
0.9
0.8
0.7
0.6
Duration 0.5 Exclusivity
0.4
0.3
0.2
0.1
0

Divisibility Quality of title

Transferability
Unregulated MAR APDAI Kinship Panchayat

Fig. 3  Attenuation of groundwater rights dimensions in various governance models

rights at the group and individual level. For example, the MAR model showed relatively
unrestricted groundwater rights compared to Kinship group model.
Three out of the six dimensions of Scott’s (1989) model such as exclusivity, quality
of title and duration relate to the ‘security’ aspect of water right system. The remaining
three such as flexibility, transferability and divisibility concern the ‘flexibility’ aspect of
the water right system. The former is especially important for groundwater development,
whereas the latter aspect (‘flexibility’) is important for water allocation among competing
ends and regions.
Exclusivity is the key element of groundwater rights that affects the tenure security.
As long as annual extraction of groundwater does not exceed recharge, farmers (landown-
ers) are relatively secure with respect to tenure certainty. This situation is equivalent to the
‘atomic individualism’ described in Shah (2009b) where each farmer exerts an insignifi-
cant impact on the aquifer and fellow users in an abundantly recharged aquifer. Though it
is not an issue in the short run and in situations where groundwater is abundant, the long-
term tenure security of groundwater rights is uncertain.
The current configuration of groundwater rights does not provide protection for the indi-
vidual right holder against variability over time, quantity and quality due to lawful acts of
fellow users. Lack of information in terms of total availability and extraction rates of others
contributes to suboptimal individual decisions on how much to extract at any given point
in time. In more advanced groundwater economies such as Australia and USA, detailed
groundwater mapping and real-time groundwater monitoring are available using the state-
of-the-art technologies. This capacity is currently unavailable in the Indian subcontinent.
In fact, this uncertainty drives the users to exploit groundwater as much and as soon as pos-
sible causing negative externalities. Since users only focus on their own self-interest and

13
 Table 1  Attenuation of individual and group water-sharing rights in selected groundwater institutions
Property right dimen- Unregulated individual Community-based groundwater governance Regulatory models
sion extraction
Managed aquifer Kinship group-owned Panchayat-determined Andhra Pradesh Electricity rationing in
recharge—Saurashtra, (Mukherji 2007a, b) water price regulation participatory models Gujarat (Shah, various)
Gujarat (Mukherji 2007a, b) (Reddy et al. 2014)

Exclusivity Cannot exclude oth- Cannot exclude oth- Group and individual Individuals own tube Exclusivity impacted Cannot exclude oth-
ers from using the ers from using the exclusivity is low, as well infrastructure through social ers from using the
resource resource and the other parties cannot (not clear) but can- regulation that bans resource
benefits of MAR be excluded from the not prevent others drilling of new bore
collective action resource using the resource wells (SRWM). Bore
well owners sharing
water with neighbor-
ing farmers
Duration Varies depending on Unrestricted 12 h of irrigation in Unrestricted Restricted Restricted to 8 h of
the availability of Construction of MAR every 36 h for a agric. power supply
electricity if rationed structures (percola- group and 4 h for an per day. This is the
tion ponds, check individual main level of attenu-
dams, etc.) can ation of groundwater
An evaluation of groundwater institutions in India: a property…

potentially extend rights

the duration
Transferability Possible if the access Unrestricted Theoretically, it is Unrestricted APDAI project pro- Unrestricted
to necessary pump possible for an vided a pipe network
infrastructure is individual to transfer to transfer water to
available his or her water rain-fed farms
allocation others
Divisibility Unrestricted Unrestricted – – Restricted among the Somewhat restricted
common interest indirectly
group members
under the APDAI
project
5741

13
 Table 1  (continued)
5742

Property right dimen- Unregulated individual Community-based groundwater governance Regulatory models
sion extraction
Managed aquifer Kinship group-owned Panchayat-determined Andhra Pradesh Electricity rationing in

13
recharge—Saurashtra, (Mukherji 2007a, b) water price regulation participatory models Gujarat (Shah, various)
Gujarat (Mukherji 2007a, b) (Reddy et al. 2014)

Quality of title Poor in both individual Poor as rights and Poor in both group and Poor as rights and Backed up by the Poor
and group levels obligations of the individual levels obligations of the water-sharing agree-
title are not specified title are not specified ments under APDAI
by legislation and by legislation and project
the like the like
Flexibility Water can be redis- Unrestricted No restriction on the Poor as Panchayats Under the APDAI Restricted
tributed to any extent of land or type society determine social regula-
use subject to the of crop cultivated the water rates and tions, flexibility is
availability of pipe (not clear). However, thereby the cropping curtailed, as farmers
infrastructure ESBs (electric sub- pattern and intensity need a consensus on
mersible tube wells) crops to be grown
were collectively
owned
J. Ananda, M. Aheeyar
An evaluation of groundwater institutions in India: a property… 5743

ignore the effects of their actions on groundwater and on other users, over-exploitation is
unavoidable (Johansson et al. 2002).
The security of groundwater rights has a close link with capital investment in ground-
water development and water-extracting devices including submersible pumps. When the
resource right is insecure, and the right holder is unprotected from the uncertainties arising
from the investment, the capital investment is depressed. However, groundwater investment
in India appears to be an exception to this rule. In many parts of India where high ground-
water abstraction rates and cumulative well interferences prevail, frequent and premature
well failures have been widely reported (Palanisami et al. 2008; Anantha 2013). For exam-
ple in Karnataka, frequent well failures have been reported in the dry areas (Diwakara and
Chandrakanth 2007) and the burden of well failure more or less equally shared by all farm-
ers but poor farmers are the worst victims of resource scarcity (Anantha 2013). The provi-
sion of free electricity and soft loans for irrigation exacerbates the negative impact of well
failure (Chandrakanth and Arun 1997).
Water-sharing arrangements in the Social Regulations in Water Management (SRWM)
project of Andhra Pradesh effectively impacted the ‘exclusivity’ feature of groundwater
rights (see Table 1). Rapid growth and indiscriminate drilling of bore wells had resulted in
widespread well failures and loss of investments in Andhra Pradesh in early 1990s (Reddy
et  al. 2014). Against this backdrop, the project aimed to change the mind-set of farmers
from competition to cooperation11 and to increase the ‘water literacy’ among the farmers.
This included farmers volunteering to monitor groundwater levels in selected bore wells
using simple devices. After three years of intensive grassroots-level learning, it appears
that the community has realized the ill-effects of indiscriminate drilling and has agreed to
social regulations such as no new bore wells to be drilled in the village, equitable access to
groundwater by sharing well water,12 increasing the groundwater recharge by conservation
and efficient use of irrigation through demand-side management (Reddy et  al. 2014). It
appears that sharply rising marginal costs and declining share in limited groundwater have
paved the way to implement social regulatory measures.
The second property rights dimension, ‘duration,’ is a key characteristic influencing
groundwater entitlement and the use behavior. Altering the ‘duration’ element of ground-
water right has been widely practiced India. This characteristic, in an unregulated ground-
water right setting, enables the right holder to extract water without any time restriction.
Electricity rationing in groundwater management primarily restricts the duration aspect of
the groundwater right. As presented in Table 1, electricity rationing in Gujarat effectively
curtailed the groundwater abstraction duration to 8 h, which is a strong form of groundwa-
ter right attenuation. The policy not only eliminated massive transaction costs on monitor-
ing and compliance because a separate feeder line for agricultural use ensured an exclusive
restriction of electricity for groundwater abstraction. The attenuation of groundwater right
was equally effective for both individual and group well owners. Various institutional mod-
els feature different levels of attenuation of the duration aspect of the groundwater right.
For example, the water sharing rules of the Kinship group-owned tube wells in West Ben-
gal allow each sub-group of farmers to use 12 hours of irrigation water in every 36 hours
(Mukherji 2007b). Groundwater price regulation carried out by the Panchayat society in
the same state had zero impact on the duration aspect of the de facto groundwater right.

11
  This is roughly analogous to the stage of ‘cooperative gaming’ discussed in Chapter 6 (Wells and Institu-
tions) of ‘Taming the Anarchy’ (Shah 2009b).
12
  The number of farmers sharing wells has increased from 8 in 2004 to 78 in 2011 (Reddy et al. 2014).

13
 5744 J. Ananda, M. Aheeyar

Influencing the ‘transferability’ dimension of the property right can enhance water-
sharing arrangements as evidenced in the Andhra Pradesh Drought Adaptation Initiative
(APDAI). Under this pilot project, farmers were supplied with pipe networks to transfer
water to rain-fed farms. The area-based approach adopted in this project involved organ-
izing farmers under common interest groups for a rain-fed patch where a formal agreement
details the water regulations and cost sharing of the pipe installation in the presence of a
revenue official at the sub-district level (Reddy et al. 2014).
The fourth element in the framework such as the ‘flexibility’ of groundwater rights
specifies the extent to which the right allows an alteration to the pattern of use. Under
unregulated de facto groundwater rights, farmers have maximum flexibility in terms of
deciding the cropping pattern or using water for some other enterprise or selling it alto-
gether. In community or group well ownership situations, the flexibility of groundwater
right can be significantly restricted. For example, in West Bengal, flexibility of de facto
groundwater rights is indirectly restricted by Panchayat societies by fixing water rates for
different crops (Mukherji 2007b). However, the Kinship group-owned institutional model
of the same state, the crop choice and the decision of extent of land cultivated reside with
the individual farmer who is a member of a community well. Under the abovementioned
APDAI initiative, the flexibility of property right was considerably reduced since individ-
ual farmers must reach a group consensus on what to grow on their field. This is because
all the bore wells were pooled through a common pipeline network and water was shared
among all farmers irrespective of well ownership (Reddy et al. 2014).
A closely related aspect to the ‘flexibility’ element is the ‘transferability’ characteristic
of the groundwater right. Voluntary transfer of de facto groundwater rights requires the
concomitant transfer of land rights because currently, land and groundwater rights are bun-
dled together in the Indian subcontinent. There is no market for groundwater rights per se.
However, the sale of groundwater in informal groundwater markets is widespread in many
parts of India. In that sense, groundwater right is transferable provided that an able and
willing buyer is in the close proximity. However, the transferability can be restricted when
groundwater is used for purposes other than agriculture, farther away from the well. Also
groundwater right is currently tied to the land right, and increase in future demands due to
urbanization and industrialization may be difficult to meet (Veeman 1978).

5 Lessons learnt and policy implications

Groundwater governance has been an intractable policy challenge. Nevertheless, there is

no doubt that improvements are needed and can be made to better manage groundwater in
a sustainable manner. This section distills several lessons for other developing groundwater
economies. The section also presents some policy implications arising from the preceding
analysis.

• Complexity in groundwater governance means that there is no silver bullet solution

to manage groundwater sustainability. Most of the groundwater governance experi-
ence is highly context-specific, and their wider applicability depends on the similarity
in hydrogeology, aquifer type and socioecological and sociopolitical imperatives. For
example, the governance models suited to hard rock, deep aquifers prevalent in India
have less relevance to the shallow well aquifers in Sri Lanka, which are vulnerable to

13
An evaluation of groundwater institutions in India: a property… 5745

pollution and water quality issues. Thus, the context is critical when recommending
solutions to groundwater governance.
• Governance arrangements that underpin the ‘exclusivity’ and ‘duration’ dimensions
of groundwater rights are likely to have the largest impact in terms of managing the
resource sustainably. Ensuring exclusivity either at private or at group level provides
security to the right holder who is more likely to factor in long-term aspects of the
resource. Certain community-managed groundwater systems in India mimic a shared
groundwater rights system through social regulations, which can be an effective sec-
ond-best solution given the right context.
• Indirect regulatory measures such as electricity rationing influence the ‘duration’
dimension of groundwater right and have a great impact in Gujarat. Pump regulation
at the point of sale is another plausible measure where one can curtail the volume of
extraction notwithstanding the enforcement costs.
• Groundwater development subsidies and other agricultural subsidies can have per-
verse outcomes that may lead to strong path dependencies and can restrict future policy
options. For example, extending fertilizer subsidy to cover crops grown using ground-
water in Sri Lanka can potentially accelerate the rates of groundwater extraction. Simi-
larly, solar pump subsidies for groundwater can also have unintended negative effects.
Once a subsidized scheme is set, politically, it is very difficult to unwind that.
• Community-based groundwater management models in India offer much scope but
not without some caveats. In situations analogous to atomic individualism, one cannot
expect to see collective action by farmers to agree on water-sharing arrangements and
self-regulation of tube well expansion. These water-sharing arrangements offer much
promise because of the embedded mechanisms to reduce transaction costs and also
because of their scope to address equity considerations in groundwater access and use.
That said there is no guarantee that water-sharing governance arrangements will enable
a smooth transition to a full property rights system.
• Most pilot projects on community-based groundwater management feature heavy sub-
sidies on pump infrastructure, micro-irrigation supplies and the like and are mostly
donor funded. There is little evidence that collective action to manage groundwater sus-
tainably at the grassroots level evolves in an organic manner.
• Enhancing the ‘transferability’ dimension of groundwater right has facilitated water-
sharing arrangements as evidenced in Andhra Pradesh. Substantial external interven-
tions and investment in terms of supplying pipe networks and the like have aided these
initiatives, and overall costs and benefits must be evaluated before implementation of
such schemes.
• Altering the ‘flexibility’ dimension is a common feature in many community-based
groundwater systems. There is some evidence that social regulatory measures have
shifted cropping systems away from water-intensive crops. Moving groundwater to its
highest economic value can help efficient use of a scarce resource.

6 Concluding comments

Groundwater governance has become an intractable policy issue, which has many implica-
tions for the living standards and well-being of millions of rural poor in the Indian sub-
continent. Understanding groundwater use and exploitation is complex as it is influenced
by various hydrogeological, sociopolitical and socioeconomic factors. Hence, it is not

13
 5746 J. Ananda, M. Aheeyar

surprising that no single policy or institutional model can be upheld as the guiding success
in groundwater policy formulation. Merits of enforcing private and tradable property rights
in groundwater have been advocated by many scholars in recent times but without much
discussion on a plausible policy trajectory to achieve such a goal.13
This paper attempted to evaluate the current regulatory and institutional settings from
a property rights perspective. To illustrate how different governance measures impact on
the groundwater use, we used a multi-dimensional property rights model to decompose
de facto groundwater rights. Some broad lessons have been drawn from the analysis. The
analysis also underlined the importance of transaction costs and information requirements.
Applying this framework to selected groundwater governance models in India revealed
that different dimensions of the groundwater right are influenced by various measures. The
analysis also suggests that there is scope for group groundwater sharing imposed by formal
or informal social regulatory measures. In addition, distortionary subsidies in India, both
for groundwater development and for agriculture in general, have had an adverse impact of
the resource use and merit further attention.
Groundwater sector reforms are highly context-specific. For example, addressing trans-
ferability issues through piped water in Andhra Pradesh are localized and heavily subsi-
dized externally and therefore extrapolations cannot be applied across the country let alone
in the subcontinent. Forced implementation of institutional, legal or economic policies
to address groundwater depletion is more likely to fail (International Water Management
Institute 2014; Giordano and Shah 2014). Past experience suggests that rushed reforms in
the water sector not only fail to achieve the set goals but also squander the future opportu-
nities as evidenced by Sri Lanka water reform experience (see Samad 2005, for example).
Hence, it is important to pay attention not only to natural and sociopolitical factors but also
to the stage of water reform that a country is at before recommending policies.

Acknowledgements The principle author gratefully acknowledges the support provided by Dr. Peter
McCornick (then Deputy Director General of International Water Management Institute), Water for Food
Daugherty Global Institute, University of Nebraska, USA, and Dr. Madar Samad, IWMI, Sri Lanka, in con-
ducting this research.

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