Markets, Contracts, and Uncertainty in a Groundwater Economy / Xavier Gine

By: Contributor(s): Resource type: Ressourcentyp: Buch (Online)Book (Online)Language: English Series: World Bank E-Library ArchivePublisher: Washington, D.C : The World Bank, 2016Description: 1 Online-Ressource (50 p)Additional physical formats: Erscheint auch als: Markets, Contracts, and Uncertainty in a Groundwater Economy. Druck-Ausgabe Washington, D.C : The World Bank, 2016DOI: DOI: 10.1596/1813-9450-7694Online resources: Summary: 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 IndiaPPN: PPN: 1724866575Package identifier: Produktsigel: ZDB-1-WBA
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