5 Aug 2014

Groundwater governance -- carrots or sticks?

MGC copied me on an an email he sent to a student:
With 150 million farmers and around 25 million groundwater wells distributed all over in the nook and corner [in India], any policy recommendation should have low transaction cost of implementation. If the transaction cost exceeds the tax revenue from pricing water or electricity, it is an unviable policy.

Carrots work more effectively in India than sticks. In addition, incentives for those who adopt or who eat carrots and no incentives (not disincentives) for those who do not eat carrots, will also work. However, sticks don't since transaction cost of administering sticks is heavy and goes negative. Capacity building, awareness, incentives for those who adopt, linking benefits from developmental programs with those who have adopted efficiency measures, will and can work, but not sticks. This is my stand. It is left to you to reject. I do not insist that you should agree to this.
I agree that it's difficult to make sticks work, but I'm more skeptical about the effectiveness of carrots that are designed or applied by outsiders. Instead, I'd leave groundwater management to locals sharing an aquifer, so they can find their own governance model. The stick is their failed future, should they not control use.