Sectoral Allocation & Pricing of Ground Water


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Sectoral Allocation & Pricing of Ground Water- Confederation of Indian Industry CII

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Sectoral Allocation & Pricing of Ground Water

  1. 1. Sectoral Allocation & Pricing of Groundwater V. Damle Confederation Of Indian Industry © Confederation of Indian Industry
  2. 2. Applicability of this paperPrimary focus: Predominantly agricultural watersheds & aquifer commands, and rural watersheds & aquifer commands where industrialisation is spreadingHydrological systems of 7,500 to 15,000 ha scaleSurface hydrology as well as hydrogeologyHydrological units may include MI Tanks & Smaller Medium Projects w.r.t. surface hydrologyMay include perennial GW availability areas © Confederation of Indian Industry
  3. 3. Proposed Allocation Policy © Confederation of Indian Industry
  4. 4. Basic water rights and allocations to farmers as basic serviceRural food security and poverty alleviation can be addressed through water allocations as basic rightBasic water right of 5,000 m3 to a nuclear family of 5-6 membersTrading within sector may be permittedThis will allow diversity of livelihood choices while at the same time providing basic securityThis 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. © Confederation of Indian Industry
  5. 5. Allocation to environmentThis can promote plantations as a livelihood option and/or commercial enterpriseCan address biomass requirements of fodder and fuelCan enable energy plantations for renewable energyCan enable protective plantations for industriesThis allocation may be made available to any existing water user in the hydrological unitThis may be non tradable allocationShould be at lowest possible rate © Confederation of Indian Industry
  6. 6. 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 © Confederation of Indian Industry
  7. 7. 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 – © Confederation of Indian Industry
  8. 8. 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 useand 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. © Confederation of Indian Industry
  9. 9. continuedTrading 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. © Confederation of Indian Industry
  10. 10. Institutional mechanisms• The regulatory authority• The local Governance institutions• The local management institutions• Technical and training support institutions. © Confederation of Indian Industry
  11. 11. Sectoral water pricing © Confederation of Indian Industry
  12. 12. “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 © Confederation of Indian Industry
  13. 13. Groundwater pricing for industry – Pricing factorsRoyalty – Is it tenable in view of the Easements Act 1882Expert 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 © Confederation of Indian Industry
  14. 14. continuedO&M costs for water abstraction & distribution service – only where this service is being offeredWastewater treatment service – Only where this is ebing offered & utilised, mainly applicable to SMEsWaste water conveyance serviceOther considerations in water pricingCross subsidisation – can bring in arbitrariness unless the rates for lower end use are based on recommendations of NWP 2002 © Confederation of Indian Industry
  15. 15. continuedAs 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 deterrentOpportunity 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 haImportant recommendation: Various components of pricing should go to the respective agency so that we can move towards management of ground water. © Confederation of Indian Industry
  16. 16. GW pricing for agricultureBefore 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. © Confederation of Indian Industry
  17. 17. ContinuedRecommendations for energy pricing for agricultureEnergy 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 plantsEnergy pricing to environmental allocations may also be fixed in suitable term to provide a policy pushCommercial water service to agriculture may be charged in fully commercial terms. © Confederation of Indian Industry
  18. 18. Concluding remarksThe 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. © Confederation of Indian Industry
  19. 19. 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. © Confederation of Indian Industry
  20. 20. Assessment toolsExample of an 8000+ ha basin in Maharashtra near Pune © Confederation of Indian Industry
  21. 21. Bhigwan Geology © Confederation of Indian Industry
  22. 22. Bhigwan – conceptual cross section of aquifers © Confederation of Indian Industry
  23. 23. Bhigwan – GW potential © Confederation of Indian Industry
  24. 24. Bhigwan Hydrogeology © Confederation of Indian Industry
  25. 25. Bhigwan – Geo reference hydrogeology © Confederation of Indian Industry
  26. 26. Bhigwan water use – canal irrigation © Confederation of Indian Industry
  27. 27. Bhigwan water use – Lift Irrigation © Confederation of Indian Industry
  28. 28. Bhigwan Water Use – Well irrigation © Confederation of Indian Industry
  29. 29. Bhigwan IrrigationOfficial irrigation not more than20% of over 3900 ha area © Confederation of Indian Industry
  30. 30. END© Confederation of Indian Industry
  31. 31. Participatory crop demo trials © Confederation of Indian Industry
  32. 32. Results of crop demo trials © Confederation of Indian Industry
  33. 33. Difference in crop growth & luster © Confederation of Indian Industry
  34. 34. Difference at flowering stage © Confederation of Indian Industry
  35. 35. END© Confederation of Indian Industry