Managing the externalities of groundwater use by minimising the negative impacts of over-exploitation, while preserving the benefits from such use, has emerged as the key natural resources management challenge in South Asia. Direct regulation of groundwater is not a feasible option in the region given the large number of pumps (over 20 million or so) and the huge transactions costs involved. In this context, an indirect mechanism, such as the regulation of the electricity supply and changes in electricity pricing and subsidies, can provide an effective tool for governing groundwater use. The link between groundwater and electricity is rather straight forward – electricity is used for pumping groundwater from aquifers. This paper documents three such cases of electricity reforms that have had a profound impact on groundwater use in the Indian states of Gujarat and West Bengal.
On the Water Front: Selections from the 2009 World Water Week in Stockholm. 8 pp.