Water withdrawal and sustainability concerns in sugarcane cultivation in Western India: An application of the SURE model

Abstract This study attempts to quantify farmers' response to output and input prices for irrigation water use to examine the issue of sustainability in sugarcane cultivation in Maharashtra, India. We used a seemingly unrelated regression estimator (SURE) to estimate a translog profit function model. Secondary data on production costs covering the period of 1971–2021 were used. The results show that the sugarcane price affects not only production but also irrigation demand. The elasticity of irrigation demand with respect to the output price is highly responsive (i.e. 1.94), which could be the main reason for groundwater extraction. The continuous increase in the guaranteed price of sugarcane and the relatively lower cost of irrigation motivate farmers to continue sugarcane cultivation. The findings of this study justify significant policy interventions for the sustainable production of sugarcane in Maharashtra.