Sustainability of groundwater resources in India: challenges and scope for economic instruments and policy

In this paper we address the groundwater resource management issues in selected regions of India, within the context of the policy and natural environments that exist. We illustrate the underlying nature of the resource management problem, and suggest possible alternative interventions, with the use of an economic model that is linked to a simplified representation of the characteristic hydrology. By illustrating the policy problem in this way, the paper explores the scope that alternative economic instruments could have in correcting the perverse incentives that exist for groundwater conservation, in some regions, while improving human welfare. In doing so, we hope to better clarify the role of market (and non-market based) instruments in addressing common pool resource management problems in India, and provide guidance to researchers and policy makers on how they can best study these cases, and further refine their policy recommendations