ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Measuring the Marginal Value of Water and Elasticity of Demand for Water in Agriculture

Data from a survey of groundwater sales between farmers in the upper Papagni watershed in Andhra Pradesh and Karnataka suggests that raising the marginal price of electricity to somewhere near its true cost could substantially mitigate the problem of over-extraction of groundwater. This is a pilot study from a small area, so that results call for larger surveys to more reliably estimate water demand curves. Larger surveys would also enable us to examine additional issues like how efficient is water allocation in surface irrigation systems; do marginal water values vary much more between river basins than within river basins; if not, then the rationale for inter-basin transfers becomes less compelling.

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