© Confederation of Indian Industry Sectoral Allocation & Pricing of Groundwater V. Damle Confederation Of Indian Industry.

© Confederation of Indian Industry

Sectoral Allocation & Pricing of Groundwater

V. Damle

Confederation Of Indian Industry

Applicability of this paper

Primary focus: Predominantly agricultural watersheds & aquifer commands, and rural watersheds & aquifer commands where industrialisation is spreading

Hydrological systems of 7,500 to 15,000 ha scale

Surface hydrology as well as hydrogeology

Hydrological units may include MI Tanks & Smaller Medium Projects w.r.t. surface hydrology

May include perennial GW availability areas


Proposed Allocation Policy


Basic water rights and allocations to farmers as basic service

Rural food security and poverty alleviation can be addressed through water allocations as basic right

Basic water right of 5,000 m3 to a nuclear family of 5-6 members

Trading within sector may be permitted

This will allow diversity of livelihood choices while at the same time providing basic security

This allocation roughly equivalent to 1 ha irrigated agriculture. Framers with more lands can invest in irrigation equipment to cover larger areas. Farmers with less land can take up water intensive cash crops. Landless can take up share cropping with their own water & therefore manage better share.


Allocation to environment

This can promote plantations as a livelihood option and/or commercial enterprise

Can address biomass requirements of fodder and fuel

Can enable energy plantations for renewable energy

Can enable protective plantations for industries

This allocation may be made available to any existing water user in the hydrological unit

This may be non tradable allocation

Should be at lowest possible rate


Additional basic rights & allocations to farmers as economic service

Will depend upon local conditions w.r.t. land & water availability, and Govt. policy to address poverty

Trading within the sector as well as across sectors with industry should be permitted

Should be at economic rates higher than that for basic service


Allocations to industry & commercial agriculture as commercial service

This may be subject to Govt. policy for agricultural and industrial development for the region

The agriculture in this category may be such that it enables d/s processing industries

The water rates for both sectors may be more or less at par and consistent with the agricultural and industrial development policy for the region

The policy decisions should be based on economic growth models w.r.t. various factors as follows –


Cont….. Factors for economic growth models

• Impetus to u/s and d/s economic activity (inputs supply and market linkage)

• Creation of income and employment opportunities for local communities

• Impetus to high quality essential services such as health, education, transport, information connectivity, etc.

• Impetus to services sector• Additional requirements of water for domestic and other civic

use

and most importantly• Revenues on water services• Value addition per unit volume of water for the whole value

chain• Tax returns and revenues to local self governments and state

and central governments.


continued

Trading of commercial allocations should be based on enhancement of water use efficiency only, and not on the basis of unused allocation. This will prevent speculative investments in water allocation.

However, due considerations should be given to the fact that industries will take some time to achieve full utilisation of allocations, and that there would be periodic ups and downs due to natural conditions like rainfall and economy related issues such as inflation, recession, etc.


Institutional mechanisms

• The regulatory authority

• The local Governance institutions

• The local management institutions

• Technical and training support institutions.


Sectoral water pricing


“There is, therefore, a need to ensure that the water charges for various uses should be fixed in such a way that they cover at least the operation and maintenance charges of providing the service initially and a part of the capital costs subsequently”.

“The subsidy on water rates to the disadvantaged and poorer sections of the society should be well targeted and transparent”.

....National Water Policy 2002 – w.r.t. financial and physical sustainability


Groundwater pricing for industry – Pricing factors

Royalty – Is it tenable in view of the Easements Act 1882

Expert Group on Groundwater Management and Ownership (Planning Commission, 2007) - Government has regulatory powers so that one user’s pattern of use should not affect the rights of other users with respect to quality and quantity. However, the basic right to access groundwater is as per the Indian Easements Act, 1882 and tied to land ownership.

Administrative costs – No. of agencies involved - CGWB / CGWA, Central and State Pollution Control Boards, State Water Resources Departments, District Administration, Municipalities, etc.

Infrastructure for GW augmentation and recharge – may be treated on par with head works in surface water schemes w.r.t. NWP 2002 recommendations on recovery towards capital costs


continued

O&M costs for water abstraction & distribution service – only where this service is being offered

Wastewater treatment service – Only where this is ebing offered & utilised, mainly applicable to SMEs

Waste water conveyance service

Other considerations in water pricing

Cross subsidisation – can bring in arbitrariness unless the rates for lower end use are based on recommendations of NWP 2002


continued

As deterrent to excessive use – again has potential for arbitrariness. Reasonable water use productivities may be fixed and use above that may be charged additionally as deterrent

Opportunity cost – e.g. opportunity cost of 20,000 m3 of water is say Rs. 2.5 /m3 w.r.t. foregone use for sugarcane since same amount of water will generate an income of Rs. 50,000 per ha

Important recommendation: Various components of pricing should go to the respective agency so that we can move towards management of ground water.


GW pricing for agriculture

Before moving towards positive cost of GW for agriculture (i.e. above mentioned factors of pricing), it is first necessary to address some of the important policy handicaps, viz. energy pricing for agriculture.

Energy pricing should reflect some or the other real costs of generation. If available energy is considered as a pool of energy resources classified in terms of costs of generation then this pool may consist of following energy resources –

• Old hydropower plants• New hydropower plants• Old thermal power plants• New thermal power plants• Nuclear power plants.


Continued

Recommendations for energy pricing for agriculture

Energy pricing for basic water service may correspond to the lowest cost energy in the pool, i.e. old hydropower plants. This will itself still be a subsidy shock.

The energy pricing for the additional basic economic water service may correspond to the second or third lowest cost energy in the pool, i.e. new hydro power plants or old thermal power plants

Energy pricing to environmental allocations may also be fixed in suitable term to provide a policy push

Commercial water service to agriculture may be charged in fully commercial terms.


Concluding remarks

The allocation and pricing policy suggested in this paper has potential to address priority issues such as poverty alleviation, environment rehabilitation, promotion of commercial agriculture and d/s value chain, and also sustainable promotion of industrialization so as to enable a balanced economic growth of the hydrological units, with the hope this will also bring in a services sector with good quality services and essential services such as health and education.


However, this can become possible only if there is a shift to “management of GW resources”. This requires assessment tools so as to quantify availability and requirements and for evolving strategies for plugging the gaps in needs and availability.


Assessment tools

Example of an 8000+ ha basin in Maharashtra near Pune


Bhigwan Geology


Bhigwan – conceptual cross section of aquifers


Bhigwan – GW potential


Bhigwan Hydrogeology


Bhigwan – Geo reference hydrogeology


Bhigwan water use – canal irrigation


Bhigwan water use – Lift Irrigation


Bhigwan Water Use – Well irrigation


Bhigwan Irrigation


Official irrigation not more than 20% of over 3900 ha area

END


Participatory crop demo trials


Results of crop demo trials


Difference in crop growth & luster


Difference at flowering stage


END


© Confederation of Indian Industry Sectoral Allocation & Pricing of Groundwater V. Damle Confederation Of Indian Industry.

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© Confederation of Indian Industry Sectoral Allocation & Pricing of Groundwater V. Damle Confederation Of Indian Industry.