Inducing the shift from flat-rate or free agricultural power to metered supply: Implications for groundwater depletion and power sector viability in India

SummaryIndia’s farm sector sustains livelihoods for hundreds of millions of rural people, but faces serious management challenges for land, water, and energy resources. Growing dependence on groundwater threatens water resources sustainability and power sector viability. Sustaining India’s rising prosperity rests on managing groundwater. This study shows that raising power tariffs in the farm sector to achieve efficiency and sustainability of groundwater use is both socially and economically viable. The question is about how to introduce this shift. This paper discusses five different options for power supply, metering and energy pricing in the farm sector and the expected outcomes of implementing each vis-a-vis efficiency of groundwater and energy use, equity in access and sustainability of groundwater. It concludes that establishing an energy quota for each farm-based on sustainability considerations, and metering and charging pro rata for power used are the best options to manage groundwater and the energy economy.

► Shift in power tariff from flat rate to pro rata results in better water productivity (Rs/m3) in farming operations.
► Such shift in power tariff also results in reduction in groundwater pumping per ha of irrigated land.
► When confronted with marginal cost of using electricity and water, farmers derive greater return per unit of land.
► Raising power tariff to achieve efficiency and sustainability of groundwater use is both socially and economically viable.
► Introducing energy quotas and charging pro rata for power used are the best options to manage groundwater and energy economy.