Assessing the Functionality of Groundwater Markets in Green Revolution States of India: A Case Study of Punjab and Haryana

The rapid development of groundwater irrigation in the changing dynamics of the Indian agricultural economy has increased the emphasis on the growing and complex role of the informal institution of groundwater markets. This study examines the form, functioning and impact of groundwater markets in the different regions of India’s Green Revolution states of Punjab and Haryana. The cross-sectional analysis of 400 farmers highlights that around 26% and 33% of farmers in Punjab and Haryana participate in groundwater market-based activities, respectively. A significant disparity in net earnings was observed among rice growers, with farmers dependent on purchased groundwater earning the least in both Punjab and Haryana. In contrast, earnings from wheat showed no notable variation among groundwater users across the two states. The key factors influencing the decision to purchase groundwater were the size of agricultural landholdings and the extent of land fragmentation in both states. On the other hand, rising tubewell maintenance costs encouraged the sale of groundwater.