The effect of private tubewells on income and income inequality in rural Pakistan

- We develop two models to estimate how private tubewells influence rural income.
- Tubewells work to enhance income and to reduce income inequality in rural Pakistan.
- Different irrigation sources have different effect sizes on equalizing income distribution.
- Policy efforts should focus more on the development of groundwater markets.

SummarySince the introduction of private tubewells in rural Pakistan, farmers have increasingly used groundwater to supplement canal water for irrigation and improve the reliability of the water supply. Farmers obtain groundwater either from their own tubewells or from other well owners. This paper examines the effect of private tubewells on rural income, both in terms of income level and income distribution since it may differ across farmers with different irrigation status (only canal water, canal water and groundwater from own tubewell, and canal water and purchased groundwater). The results show that private tubewells work to enhance rural income and reduce income inequality in rural Pakistan.