Incentivizing resource efficient technologies in India: Evidence from diffusion of micro-irrigation in the dark zone regions of Gujarat

The Gujarat state government had banned further extraction of groundwater and new electricity connection for agricultural purposes in 57 sub-districts, where over-exploitation of groundwater was observed, in 2001, and these regions were demarcated as dark zone in 2003. The micro-irrigation adopted farmers in these regions are entitled to get additional 10 per cent subsidy since 2012, and concurrently, the ban on new electricity connection was also withdrawn. In particular, adoption of micro-irrigation is mandatory for availing new power connection. Both of them could lead to a large-scale diffusion, and as a result, reducing pressure on groundwater extraction. Although various agricultural interventions are being incentivized in India, there is limited studies with respect to assessing its’ impact on farmers’ adoption behaviour. This paper, therefore, aims to evaluate effect of the above said incentives (subsidy and power connection) on diffusion of micro-irrigation in the dark zone regions. Information on the diffusion of micro-irrigation, i.e., drip and sprinkler irrigation, between 2006-07 and 2014 were collected for 8073 villages and towns, combining both dark zone (treated sample) and its adjacent non dark zone talukas (control group). The empirical analysis was performed for three different samples: (i) full sample, (ii) villages along the administrative boundary line drawn between the dark zone and adjacent talukas, i.e., border villages, and (iii) pair-wise border villages; expected to get robust estimation in the latter two cases as there could be no significant difference with respect to hydrological scenario and cropping patterns. Employing ordinary Least Square fixed effects model, results reveal that these policies are positively influencing diffusion of micro-irrigation. A pecuniary benefits and power connection together, for example, enhance the likelihood of incremental adoption rate by 1.6 per cent to 1.8 per cent and area installed with micro-irrigation technologies between 0.7 per cent and 1.3 per cent. This study, henceforth, supports the continuation of present incentive policies to further heightening diffusion of such technologies, and this approach could be replicated in the case other resource efficient technologies as minimizing water and energy footprints are always a policy priority.