Markets, Contracts, and Uncertainty in a Groundwater Economy
Groundwater is a vital yet threatened resource in much of South Asia. This paper develops a model of groundwater transactions under payoff uncertainty arising from unpredictable fluctuations in groundwater availability during the agricultural dry s...
| Main Authors: | , |
|---|---|
| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2016/06/26437790/markets-contracts-uncertainty-groundwater-economy http://hdl.handle.net/10986/24534 |
| id |
okr-10986-24534 |
|---|---|
| recordtype |
oai_dc |
| spelling |
okr-10986-245342021-04-23T14:04:22Z Markets, Contracts, and Uncertainty in a Groundwater Economy Gine, Xavier Jacoby, Hanan G. SUPPLY OF WATER HOLDING SPOT PRICE MOISTURE DURABLE GOODS HIGH IRRIGATION FLOW ACCOUNTING MARKET DISTORTIONS PARTICULAR DEBT SPOT MARKETS INTEREST GUARANTEES AGRICULTURAL PRODUCTION PUMPS CULTIVATED AREA INCENTIVE CONSTRAINT EXCHANGE OPTION PROPERTY RIGHTS AQUIFER WATER SUPPLY DEVELOPING COUNTRIES GROUNDWATER RECHARGE POLITICAL ECONOMY SURFACE WATER WATER ALLOCATIONS ASYMMETRIC INFORMATION HIGH LEVELS GAS BUDGET CONSTRAINTS WATER TABLE RENEGOTIATION MARKET FAILURE TAX TRANSACTION COST INTERNATIONAL BANK WATER RESOURCES MICRO-DATA DEVELOPING COUNTRY OPTIMAL CONTRACT BUDGET WITHDRAWALS WATER REQUIREMENTS CROP PRODUCTION SEEPAGE PARTICIPATION CONSTRAINT MORAL HAZARD CONTRACT RENEGOTIATION MARKET TRANSACTION CONTRACTS TRADING OPTIONS WATER USE WATER DEBT MARKETS HOUSEHOLD INCOME RAINFALL RETURN WATER SCARCITY RESEARCH AQUIFERS IRRIGATION WATER LANDOWNER RISK SHARING RESERVES FINANCE DRIP IRRIGATION SYSTEMS TAXES TRANSACTIONS EMERGING MARKETS TRANSACTION STORAGE CAPACITY RISK NEUTRAL WATER TRANSFER LEAD GOOD CREDIT CONSTRAINTS TAX RATE CLIMATE CHANGE DROUGHT DERIVATIVE FUTURE CULTIVATION RETURNS BILATERAL TRANSACTIONS GROUNDWATER EXPLOITATION CONTRACT SOIL MOISTURE DRY SEASON DRIP IRRIGATION PROPERTY PROPERTIES TRANSACTION COSTS SPOT MARKET MARKET BROAD RANGE EX-ANTE INCENTIVES WELLS COORDINATION FAILURE INSURANCE RENEGOTIATIONS WATER AVAILABILITY GOODS LANDOWNERS IRRIGATION SYSTEMS DURABLE COAST INVESTMENT OUTLET PIPE PIPE STATISTICS IRRIGATION GROUNDWATER SHARE METERS POVERTY TRANSACTIONS COSTS REVENUE INVESTMENTS RISK MANAGEMENT CONTRACT RENEGOTIATIONS INCENTIVE CONSTRAINTS INSTRUMENT RISK AVERSION CROPPING DECISIONS DEEP GROUNDWATER HUMAN DEVELOPMENT Groundwater is a vital yet threatened resource in much of South Asia. This paper develops a model of groundwater transactions under payoff uncertainty arising from unpredictable fluctuations in groundwater availability during the agricultural dry season. The model highlights the trade-off between the ex post inefficiency of long-term contracts and the ex ante inefficiency of spot contracts. The structural parameters are estimated using detailed micro-data on the area irrigated under each contract type combined with subjective probability distributions of borewell discharge elicited from a large sample of well-owners in southern India. The findings show that, while the contracting distortion leads to an average welfare loss of less than 2 percent and accounts for less than 50 percent of all transactions costs in groundwater markets, it has a sizeable impact on irrigated area, especially for small farmers. Uncertainty coupled with land fragmentation also attenuates the benefits of the water-saving technologies now being heavily promoted in India. 2016-06-14T21:35:40Z 2016-06-14T21:35:40Z 2016-06 Working Paper http://documents.worldbank.org/curated/en/2016/06/26437790/markets-contracts-uncertainty-groundwater-economy http://hdl.handle.net/10986/24534 English en_US Policy Research Working Paper;No. 7694 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper South Asia India |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
SUPPLY OF WATER HOLDING SPOT PRICE MOISTURE DURABLE GOODS HIGH IRRIGATION FLOW ACCOUNTING MARKET DISTORTIONS PARTICULAR DEBT SPOT MARKETS INTEREST GUARANTEES AGRICULTURAL PRODUCTION PUMPS CULTIVATED AREA INCENTIVE CONSTRAINT EXCHANGE OPTION PROPERTY RIGHTS AQUIFER WATER SUPPLY DEVELOPING COUNTRIES GROUNDWATER RECHARGE POLITICAL ECONOMY SURFACE WATER WATER ALLOCATIONS ASYMMETRIC INFORMATION HIGH LEVELS GAS BUDGET CONSTRAINTS WATER TABLE RENEGOTIATION MARKET FAILURE TAX TRANSACTION COST INTERNATIONAL BANK WATER RESOURCES MICRO-DATA DEVELOPING COUNTRY OPTIMAL CONTRACT BUDGET WITHDRAWALS WATER REQUIREMENTS CROP PRODUCTION SEEPAGE PARTICIPATION CONSTRAINT MORAL HAZARD CONTRACT RENEGOTIATION MARKET TRANSACTION CONTRACTS TRADING OPTIONS WATER USE WATER DEBT MARKETS HOUSEHOLD INCOME RAINFALL RETURN WATER SCARCITY RESEARCH AQUIFERS IRRIGATION WATER LANDOWNER RISK SHARING RESERVES FINANCE DRIP IRRIGATION SYSTEMS TAXES TRANSACTIONS EMERGING MARKETS TRANSACTION STORAGE CAPACITY RISK NEUTRAL WATER TRANSFER LEAD GOOD CREDIT CONSTRAINTS TAX RATE CLIMATE CHANGE DROUGHT DERIVATIVE FUTURE CULTIVATION RETURNS BILATERAL TRANSACTIONS GROUNDWATER EXPLOITATION CONTRACT SOIL MOISTURE DRY SEASON DRIP IRRIGATION PROPERTY PROPERTIES TRANSACTION COSTS SPOT MARKET MARKET BROAD RANGE EX-ANTE INCENTIVES WELLS COORDINATION FAILURE INSURANCE RENEGOTIATIONS WATER AVAILABILITY GOODS LANDOWNERS IRRIGATION SYSTEMS DURABLE COAST INVESTMENT OUTLET PIPE PIPE STATISTICS IRRIGATION GROUNDWATER SHARE METERS POVERTY TRANSACTIONS COSTS REVENUE INVESTMENTS RISK MANAGEMENT CONTRACT RENEGOTIATIONS INCENTIVE CONSTRAINTS INSTRUMENT RISK AVERSION CROPPING DECISIONS DEEP GROUNDWATER HUMAN DEVELOPMENT |
| spellingShingle |
SUPPLY OF WATER HOLDING SPOT PRICE MOISTURE DURABLE GOODS HIGH IRRIGATION FLOW ACCOUNTING MARKET DISTORTIONS PARTICULAR DEBT SPOT MARKETS INTEREST GUARANTEES AGRICULTURAL PRODUCTION PUMPS CULTIVATED AREA INCENTIVE CONSTRAINT EXCHANGE OPTION PROPERTY RIGHTS AQUIFER WATER SUPPLY DEVELOPING COUNTRIES GROUNDWATER RECHARGE POLITICAL ECONOMY SURFACE WATER WATER ALLOCATIONS ASYMMETRIC INFORMATION HIGH LEVELS GAS BUDGET CONSTRAINTS WATER TABLE RENEGOTIATION MARKET FAILURE TAX TRANSACTION COST INTERNATIONAL BANK WATER RESOURCES MICRO-DATA DEVELOPING COUNTRY OPTIMAL CONTRACT BUDGET WITHDRAWALS WATER REQUIREMENTS CROP PRODUCTION SEEPAGE PARTICIPATION CONSTRAINT MORAL HAZARD CONTRACT RENEGOTIATION MARKET TRANSACTION CONTRACTS TRADING OPTIONS WATER USE WATER DEBT MARKETS HOUSEHOLD INCOME RAINFALL RETURN WATER SCARCITY RESEARCH AQUIFERS IRRIGATION WATER LANDOWNER RISK SHARING RESERVES FINANCE DRIP IRRIGATION SYSTEMS TAXES TRANSACTIONS EMERGING MARKETS TRANSACTION STORAGE CAPACITY RISK NEUTRAL WATER TRANSFER LEAD GOOD CREDIT CONSTRAINTS TAX RATE CLIMATE CHANGE DROUGHT DERIVATIVE FUTURE CULTIVATION RETURNS BILATERAL TRANSACTIONS GROUNDWATER EXPLOITATION CONTRACT SOIL MOISTURE DRY SEASON DRIP IRRIGATION PROPERTY PROPERTIES TRANSACTION COSTS SPOT MARKET MARKET BROAD RANGE EX-ANTE INCENTIVES WELLS COORDINATION FAILURE INSURANCE RENEGOTIATIONS WATER AVAILABILITY GOODS LANDOWNERS IRRIGATION SYSTEMS DURABLE COAST INVESTMENT OUTLET PIPE PIPE STATISTICS IRRIGATION GROUNDWATER SHARE METERS POVERTY TRANSACTIONS COSTS REVENUE INVESTMENTS RISK MANAGEMENT CONTRACT RENEGOTIATIONS INCENTIVE CONSTRAINTS INSTRUMENT RISK AVERSION CROPPING DECISIONS DEEP GROUNDWATER HUMAN DEVELOPMENT Gine, Xavier Jacoby, Hanan G. Markets, Contracts, and Uncertainty in a Groundwater Economy |
| geographic_facet |
South Asia India |
| relation |
Policy Research Working Paper;No. 7694 |
| description |
Groundwater is a vital yet threatened
resource in much of South Asia. This paper develops a model
of groundwater transactions under payoff uncertainty arising
from unpredictable fluctuations in groundwater availability
during the agricultural dry season. The model highlights the
trade-off between the ex post inefficiency of long-term
contracts and the ex ante inefficiency of spot contracts.
The structural parameters are estimated using detailed
micro-data on the area irrigated under each contract type
combined with subjective probability distributions of
borewell discharge elicited from a large sample of
well-owners in southern India. The findings show that, while
the contracting distortion leads to an average welfare loss
of less than 2 percent and accounts for less than 50 percent
of all transactions costs in groundwater markets, it has a
sizeable impact on irrigated area, especially for small
farmers. Uncertainty coupled with land fragmentation also
attenuates the benefits of the water-saving technologies now
being heavily promoted in India. |
| format |
Working Paper |
| author |
Gine, Xavier Jacoby, Hanan G. |
| author_facet |
Gine, Xavier Jacoby, Hanan G. |
| author_sort |
Gine, Xavier |
| title |
Markets, Contracts, and Uncertainty in a Groundwater Economy |
| title_short |
Markets, Contracts, and Uncertainty in a Groundwater Economy |
| title_full |
Markets, Contracts, and Uncertainty in a Groundwater Economy |
| title_fullStr |
Markets, Contracts, and Uncertainty in a Groundwater Economy |
| title_full_unstemmed |
Markets, Contracts, and Uncertainty in a Groundwater Economy |
| title_sort |
markets, contracts, and uncertainty in a groundwater economy |
| publisher |
World Bank, Washington, DC |
| publishDate |
2016 |
| url |
http://documents.worldbank.org/curated/en/2016/06/26437790/markets-contracts-uncertainty-groundwater-economy http://hdl.handle.net/10986/24534 |
| _version_ |
1764456973009420288 |