Interdisciplinary Literature Study on demand management of the Kaladera aquifer in Rajasthan, India
Nicolien van Aalderen 10276556
Myrte Rischen 10271597
Dienke Stomph 10178449
Future Planet Studies - University of Amsterdam – December 2014
Abstract
This report investigates how demand management, aiming for sustainable use of the Kaladera aquifer, in the state of Rajasthan, India, could be achieved by integrating economic, social and environmental subsystems. Since integration of these subsystems is characterized by complexity and the necessity of an overarching perspective, the report uses an interdisciplinary approach. This approach entails incorporation of the concepts: water demand management and resilience. The research combines findings from nine case studies, comparable to Kaladera, to evaluate which water charging instruments and other demand management tools are most suitable for the region. Block pricing and crop-area based pricing were found to be most applicable water pricing instruments due to their ability to balance trade-offs between economic efficiency, social equity and environmental sustainability. Furthermore, implementation of a water charging structure should be accompanied by the establishment of a well-defined water right structure, the presence and monitoring of a WUA, farmers participation and acceptance, and the implementation of both positive and negative incentives. Lastly, decision-making on demand management tools should consider and match with local circumstances and experiences.
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Table of Content
List of Abbreviations 3
Map of Kaladera, Rajasthan, India 4
Introduction 5
The Kaladera case 7
Water users 8
A lack of legislation 8
Lost in translation – from theory to practise 9
Informal markets 9
Kaladera: deteriorating resilience 11
Resilience: linking human behavior to ecosystem dynamics 11
Degradation of an ancient resource 12
Legislative limitations to great adaptive capacity 13
Vulnerable equity issues 13
Valuing water 14
A transition 14
Integrated Water Resource Management 14
Water Demand Management 15
Fusion of WDM and resilience 15
Demand management instruments 17
Results 19
WPM - What instruments are out of tune? 19
Possibilities and pit-falls in determining the price 21
Initial conditions for successful implementation 22
Discussion 24
Limitations to our research 24
From theory to practise 24
Conclusion 26
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List of Abbreviations
Central Water Commission CWC
Integrated Water Resource Management IWRM
Water Demand Management WDM
Water Pricing Method(s) WPM
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Map of Kaladera, Rajasthan, India
1Figure 1 - Map of the Kaladera region
1 Source: Google maps
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Introduction
Groundwater is a water source of major importance due to its continuous nature and relatively high quality. Asia’s largest countries—India, Pakistan, China, Bangladesh, Indonesia, Thailand and Vietnam—are more than 50% dependent on groundwater as a source for fresh water supplies (Morris, et al., 2003). In these fast developing countries groundwater is under threat of degradation. This is mainly induced by the steady growth of water demand, due to population growth, and per capita demand due to increasing welfare resulting in alteration of the agricultural and industrial needs (Morris, et al., 2003).
Technological developments on the domain of groundwater abstraction led to rapid dispersion and growth of drilled boreholes and motorized pumping. For example, in rural India alone, 16 million motor-driven pumps were installed over recent years, therewith allowing acute expansion of irrigation and drinking water supply (Morris, et al., 2003). These technological developments provided sustenance to agrarian economies and millions of rural livelihoods (Shah, Roy, Qureshi, & Wang, 2003). Nonetheless, it simultaneously poses two tremendous threats. Firstly, mismanagement can have disastrous effects on the ecosystems functioning through: water degradation, quality deterioration, and decreasing ecosystem and land productivity (Morris, et al., 2003). Secondly, the dependence on the water resource for provision of primary necessities has increased analogous with the installation of new pumps (Shah, et al., 2003).
Another partial anthropogenic induced trend that may increase water stress is climate change. The Intergovernmental Panel on Climate Change predicts that the onset of climate change will increase both severity as frequency of droughts in Asia (Stocker, et al., 2013). These emerging trends indicate that current economic, environmental and social systems will be exposed to change.
The transformation of system Earth by anthropogenic activities requires an understanding of how the productivity and biotic diversity of ecosystems can be sustained (Lubchenco et al. 1991). Simultaneously, economic efficiency and social equity are just as important to reach a sustainable water-use (Jønch-Clausen & Fugl, 2001).These goals are commonly antagonistic, suggesting that trade-offs are essential. Therefore in general, an ‘optimal’ state for each of these sub-systems is not to be achieved (Molle, 2008).
6 Furthermore, when seeking for sustainable use, it should be considered that sustainable management is not an end state but a “cyclic and long-term process” (Jønch-Clausen, 2004). In the state of Rajasthan, India, difficulties described above have evolved over the past decades. This report will focus on the Kaladera aquifer, which has been exposed to ongoing over-abstraction. The current social and environmental state indicate a necessity to alter the current management practices. This raises the question on how to manage the water resource in a manner that enables long-term usage and meets social as well as environmental needs. Managing the demand is an essential part of this for excessive abstraction is a major threat to long-term usage.
This report investigates how demand management, aiming for sustainable use of the Kaladera aquifer, could be achieved by integrating economic, social and environmental systems. Since integration of these systems is characterized by complexity and the need for an overarching perspective (Pahl-Wostl, Sendzimir, Jeffrey, Aerts, Berkamp, & Cross, 2007), the report employs an interdisciplinary approach. Since water as a resource is inevitably connected with the human and environmental system the approach under which adoptable practises should be evaluated is an integrated and thus interdisciplinary approach
(Medema, McIntosh, & Jeffrey, 2008).
The report focuses on the extent to which water valuing instruments -with the aim of balancing trade-offs between equity, efficiency and environmental sustainability- are applicable in the Kaladera context. Therefore the reports sections will subsequently address the following questions:
What aspects of the three sub-systems -environmental, social and economic- are driving forces behind water exploitation in the context of Kaladera, Rajastan? What management concepts and instruments can be used to promote
sustainable use?
What can be learned from other studies?
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The Kaladera case
The Kaladera watershed houses more than half a million people (Karnani, 2012). It is situated in the transition zone of an arid to semi-arid climate. The mean annual rainfall amounts 500mm and the rainfall pattern is highly unpredictable and brings about serious shortfall as well as drastic flooding (Rao & Sharma, 2013). The low annual rainfall and a highly unpredictable rainfall pattern make its inhabitants mainly dependent on groundwater for irrigation, domestic and industrial water use. Furthermore, since 1998 the watershed has been listed over-exploited by the Central Ground Water Board, which means the withdrawal rate exceeds the natural recharge rate (Karnani, 2014). This is in accordance with the study executed by The Energy and Resources Institute (2006) reporting a depletion rate exceeding recharge by a factor 1.35. The water balance (figure 2) of the Kaladera aquifer is depicted below.
Figure 2 - The water balance of the Kaladera aquifer, displaying the major regulating flows. As depicted, both recharge and precipitation (500 mm/yr) are smaller than pumping (675 mm/yr), while ground water inflow and outflow can be estimated to be equal. Surface discharge has not been studied; this may imply that this is not a major determinant of the water balance. 2
2 Image composed based on information by: The Energy and Resources Institute (2006), Rao & Sharma
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Water users
The Kaladera aquifer is used for three main purposes; agricultural; industrial; and domestic use. The nature of the water extraction differs largely among users.
Firstly, agriculture is the largest water-using sector of the region, accounting for approximately 91% of total groundwater abstraction (Karnani, 2012). The fast majority of the region depends on agriculture for their livelihoods. The cultivation is composed of relatively water inefficient crops such as oilseeds, wheat, barley and onion (The World Bank, 1999; Central Water Commission, 2010). As mentioned before, farmers have increasingly installed bore wells and powerful pumps, which also encouraged the cultivation of water intensive crops (Karnani, 2014). Accordingly, The Energy and Resources Institute (2006) stated that by agricultural water-use alone the aquifer would be over-exploited.
Secondly, the region has an industrial park with several water-dependent factories. In 1999 the Coca Cola Company opened a factory in this park and is currently the largest and most contested industrial water user of the region (Karnani, 2013). Industrial use makes up 5% of total water abstraction (Karnani, 2012).
Finally, the domestic use accounts for 4% of the total water abstraction (Karnani, 2012). Since domestic use compromises the necessities of live, the demand is relatively inelastic or rigid (Savenije & Zaag, 2002). In addition, due to increased attention for the water-scarcity issue multiple water saving measurements have already been made in the industrial sector. For these reasons, the research focuses on the agricultural sector.
A lack of legislation
The Kaladera aquifer may be considered as a common pool resource (Karnani, 2013). This is a resource that yields finite flows of benefits and of which it is costly and difficult to exclude potential users (Ostrom, Burger, Field, Norgaard, & Policansky, 1999).
In this region the right to extract groundwater is solely depended on property rights, and legal sanctions are not clearly defined (Sharma & Sharma, 2006). As a result, any person who owns a plot of land is allowed to unrestrictedly drain water from underneath this plot. In addition abundant use is being encouraged by the free electricity
9 policy implemented by the government (Sharma & Sharma, 2006). This encourages farmers to use electric water pumps for irrigation instead of traditional water wells. As a consequence of these features, users are unrestrained in extracting water.
Lost in translation – from theory to practise
According to a report of the Central Water Commission (CWC) (2010), a water pricing structure exists in the Rajasthan State whereby the State Government determines water rates. However, the CWC (2010) recognizes a gap between policy and practise. This observation is supported by independent studies of Karnani (2013) and TERI (2008), who describe a lack of a water-pricing system in Kaladera. To minimize this gap the CWC (2010) recommends the involvement of a Water Users Association (WUA), as part of broader reforms in the Indian water policy. A WUA is a group of farmers that represents multiple farmers in a particular region and this group is involved in local water management (Veetil et al., 2011). This could strengthen community participation, simultaneously increasing efficiency and effectiveness of the resource management (Irrigation and Water Engineering Group, 2010). However, again uncertainties exist on the translation of the CWC policy goals to practise, for WUA presence in Kaladera is not reported (Karnani, 2013; TERI, 2008).
Informal markets
Although water-pricing realization by the government seems to lack, groundwater market institutions on village level are evident (Sharma & Sharma, 2006). These markets consist of localised and informal arrangements, through which large-scale farmers -who own expensive private water pumps- sell water to poor and small-scale farmers -who cannot afford the huge investment to install a water pump-. Water prices and extraction volumes are being determined by the private pump-owners, making groundwater markets exploitive for the buyers of water. Although these institutions improve physical access to water for resource-poor small farmers by allowing them to buy water from large farmers, these informal markets appear to increase economic inequality between the resource-rich, large farmers and the resource-poor, small farmers (Sharma & Sharma, 2006).
To sum up; there is a lack of legislation concerning groundwater rights; a gap between policy and practise for both water pricing and water authority; and informal, exploitive water markets exist. These trends pose large uncertainties on the systems
10 functioning. This makes prediction of its behaviour precarious. Therefore, it is of importance to study factors that prevent the current situation from changing, to shed light on these uncertainties. Resilience can be a tool in this process. Hence, the next section elaborates on environmental, social and economic determents of the Kaladera context, with a focus on resilience and its implications for a transition.
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Kaladera: deteriorating resilience
Resilience: linking human behavior to ecosystem dynamics
As stated above, the environmental state of the region has been impaired. Hence, one could question why the nature of the abstraction has not altered equivalently? To interpret this incoherence, it is of great importance to note ecosystems ability of resilience. Gunderson (2000) describes resilience as an emergent characteristic of an ecosystem, which is ‘the organic interaction between structure and process that leads to system development, regardless of initial conditions’ (p.430). These structures and processes involve features of an ecosystem such as: hydrological, ecological, climatologically and geological factors, which interact and are unlikely to alter independent from one another. By describing ecosystems on the basis of resilience, it becomes clear that ecosystems are not static entities, but rather dynamic processes that are constantly developing. A resilient system has the ability to absorb a certain magnitude of shock, the ability to self-organize, and the opportunity for learning and adaptation (Folke et al., 2002). Increased adaptive capacity enables a system to be less static and more able to adjust to changes, due to increased diversity and flexibility, and decreased vulnerability (Adger, 2000; Folke et al., 2010; Walker et al., 2014).
Besides the functioning of the ecosystem, the management of an ecosystem can also be interpreted in this manner, by applying the term resilience to social systems. Environmental resilience is inevitably linked to social resilience as ecosystems and social systems interconnected (Adger, 2000; Gunderson, 2000). Adger (2000) defines social resilience as ‘the ability of groups or communities to withstand external shocks to their social structure as a result of social, political and environmental change’. Highly resilient social systems are just as resilient ecosystems characterized by high adaptive capacity through high diversity and flexibility and low vulnerability (Walket et al., 2004). Creating social institutions that are able to adapt to changing circumstances can help to maintain the ecosystem in the desired phase (Gunderson, 2000).
This link is especially distinct if a community depends mainly on one ecosystem for their livelihoods (Adger, 2000). This seems applicable to Kaladera, as agriculture and irrigation water are crucial determinants of wellbeing in this region. Therefore it is helpful
12 to describe both the environmental and social state of the Kaladera region on the basis of their adaptive capacity.
Figure 3 - The different phases in the adaptive cycle. There is a ‘front-loop’ of growth, followed by a ‘back loop’ of collapse and reorganization (Holling, Carpenter, Brock, & Gunderson, 2002).
Degradation of an ancient resource
The incoherence between the natural recharge rate and withdrawal rate can be explained by large initial environmental resilience, and a lack or dis-functioning of social structures. It is likely that the initial state of the Kaladera watershed was characterized by large environmental resilience; related to resource accumulation -phase ‘K’ in figure 3 (Gunderson, 2000)-; which led to the ability to sustain through the present phase of degradation -phase of the ecosystem resources. Nevertheless if deterioration continues, a point will be reached in which the resilience of the prevalent phase is exceeded; the so-called ‘tipping point’, leading to a shift to a less desirable ecosystem state. This likelihood of shift of state will be largely influenced by human behaviour.
Legislative limitations to great adaptive capacity
An important social condition in Kaladera is the distribution of authority and rights of water use. These institutional structures constrain adaptation of current water policies. In general, ownership and usage rights in India have been based on heritage since the Easement Act of 1882 and are transferred from generation to generation (Speelman, 2012).
13 As mentioned above, groundwater rights in Kaladera are, according to traditional Indian law, recognized only indirectly through property rights. An independent water right system with usage rights, ownership rights and transfer rights does currently not exist in Kaladera (Karnani, 2013; Speelman, 2012; Sharma & Sharma, 2006). This situation has long been established and adjustments in the authority-structure are difficult for this takes time, trust and willingness of people to re-allocate licences (Ostrom, 2009). Because of this lack of jurisdictional basis, people cannot be held responsible for their water use behaviour. This restricts the trsut of farmers that This is likely to restrict trust of farmers that if they change their water use behaviour, others will do this too (Veetil et al., 2010). Features of a resilient system as openness for learning and adaption seem constricted in this case. (Speelman, 2012). Furthermore, the failure of local implementation of state-led water policies depicts limited adaptive capacity, as adaptations are not being executed.
Vulnerable equity issues
Another condition influencing the social resilience of the area is the economic situation. The agricultural sector is the largest water-user and employer in the Kaladera watershed and economic diversity is low. This makes the region highly dependent on agricultural revenues and therewith irrigation water. Important to note is that most agricultural workers are financially weak and vulnerable for change (Karnani, 2014). This is the vast majority and it indicates poor economic resilience.
Comparable to the water right situation, the resilience of current groundwater markets seems low, as the system is vulnerable to shocks. Since the determinations of water prices is ruled by resource-rich large farmers. This shows low empowerment for marginal groups and little diversity in decision-making on multiple scales. Polycentric governance with decision-making centres on multiple scales can enhance adaptive capacity of a system (Ostrom, 2010). Groundwater markets in Kaladera do not display this and also tend to increase inequality and inefficient water use (Sharma & Sharma, 2006). Although these markets between farmers most have some degree of connectivity and communication, which are characteristics found in resilient systems, this does not support a cohesive shared mental mode of governance of the aquifer. This seems essential in the case of absence of governance from higher levels of government.
The history of the area and conflicts concerning water-use shows that non-intervention and self-regulation are unsuitable to avert overuse of the common pool resource in the area. Moreover, state-led governance policy has difficulty to address the prevalent problems since it has no existing legal basis to found its policy on. Therefore a transformation of management theory and practise is necessary to accomplish sustainable use of the aquifer (Jønch-Clausen & Fugl, 2001). However, this aim for sustainable use should be balanced with other social and economic goals in order to diminish undesirable trade-offs (Yang, Zhang, & Zehnder, 2003). Potential measures can be directed at the supply side of water management -as recharging facilities-, or at the demand side -which should be aimed at altering the behaviour of water users and the establishment of an institutional and policy environment that allows this process-.
Integrated Water Resource Management
Integrated Water Resource Management (IWRM) has been advocated as a mean to make integrated choices and consider all involved actors and their needs. IWRM entails multi-actor decision-making and management processes, and that the resource is handled with regard to different temporal scales to ensure availability for future generations. In IWRM it is generally accepted that water should be seen as an economic good, without being blind to intrinsic ecological and social values3 (Savenije & Zaag, 2002). IWRM considers the
valuing of water as a useful tool, but argues that it should be part of a wider scope of tools
3One must be careful not to mistake the view of IWRM on water valuing with the neoliberal view on the pricing of water. According to the neoliberal view water should be priced based on its economic value (Savenije & Zaag, 2002). However, this neoliberal perspective, leaving allocation to the market, poses a large risk of failing to consider and balance interests of all sectors (Savenije & Zaag, 2002). This is caused by several reasons. First of all, water is a resource for which no substitute exists, hence people are practically forced to join this water-market and pay the established price. Also, a market-based system does not involve any redistribution schemes, consider cultural or social values or include future generations in any form. And finally, it is extremely difficult to include all stakeholders in decision-making processes within economic pricing. For these reasons; dealing with societal issues should not be left to markets (P. Hellegers, personal communication, November 19, 2014). Contrarily, IWRM aims to incorporate these factors, and considers the economic value of water, but also its ecological and social value (Savenije & Zaag, 2002). Hereby they attempt to all take trade-offs into account and make balanced choices based on these considerations.
15 and methods used. This tool is focused on the demand side, but if managed properly, its revenues can be utilized to facilitate the supply side (Yang, et al., 2003).
Water Demand Management
Water Demand Management (WDM) incorporates the vision of IWRM and puts it to practice through “the development and implementation of strategies aimed at influencing demand, so as to achieve efficient and sustainable use of a scarce resource.” (Savenije & Zaag, 2002, pp. 99-100). This demand-side policy focuses on the human causes of water problems and thus on water-users. It attempts to change behaviour and to create an institutional and policy framework that supports this goal (Food and Agriculture Organization of the United Nations, 1993). Besides efficiency, WDM also aims to improve equity and environmental sustainability, and creating a desirable equilibrium between the pursuing of these three (Savenije & Zaag, 2002).
Efficient allocation of water resources is defined by Johanssona Tsurb, Roec, Doukkalid, & Dinar (2002), who stated that this is the case when net benefits are maximized using existing technologies and water supplies. The equity of water allocation concerns the ‘fairness’ of the distribution of the resource amongst different socio-economic layers of the population (Johanssona, et al., 2002). And finally, sustainable management of the environment promotes the preservation of vital life-support systems, consequently protecting the resource on behalf of future generations (Jønch-Clausen & Fugl, 2001).
In order to manage human induced causes of water problems WDM searches for a balance between efficiency, equity and environmental sustainability. Through taking into account all trade-offs and involving the different water-users, they aim to integrate these attributes. If this is successful, it will create a capacity to deal with and adapt to non-anthropogenic induced stress-factors. Creating equilibrium between these three attributes and enhancing their total gains will thus also improve the resilience of the area. This is further elaborated below.
Fusion of WDM and resilience
Implementing new management strategies causes an alteration of the system. To maintain sustainable and effective management, evaluation of the influences of policy and resilience of the ecosystem on each other is important. As figure 2. shows, water -demand
16 management and resilience are intertwined concepts and are able tosupport each other. By addressing all water-users and taking into account the trade-offs between efficiency, sustainability and equity, as described above, decisions can be made on the desired policy direction. This policy plan may involve changes in the institutional framework to influence water-uses. These changes in water-use and its supporting institutional framework have influence on diversity, flexibility and vulnerability of the socio-ecosystem. Policy should be directed to increase diversity and flexibility and decrease vulnerability, as a highly resilient system is most preferred. But the opposite is also possible, as policies can decrease diversity and flexibility and increase the vulnerability of a socio-ecosystem.
Water consumption has a direct influence on the state of the resource. Therefore changes in water-use will have most significant impacts on the resilience of the ecosystem. Furthermore, as multiple institutional frameworks construct the social system, changes in these institutions will have most significant effects on the resilience of the social system. These utilisations of WDM tools on resilience can also be reciprocal as greater resilience of a system –both social and ecological- enables the system to adapt more easily and so facilitates adoption of new WDM tools.
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Demand management instruments
Demand management includes numerous instruments that can be used to create suitable management of a water system. Their interconnecting goal is to raise awareness and thereby reach a more desired water-use system. These measures are both aimed at the demand- and supply-side. By promoting the involvement of users in the decision-making concerning the supply of the water, these two sides get increasingly integrated (Food and Agriculture Organization of the United Nations, 1993). Authorities could implement among others4:
(1) A quota on water use, setting an upper limit to control water consumption for certain purposes.
(2) Licenses, which would legalize a stated withdraw for a certain period.
(3) Tradable water rights, by implementing a water market to enable users to trade rights within a legal framework.
(4) Subsidies, as an incentive to promote a desired allocation of water uses.
(5) Penalties, including a set of legal and financial enforcements to limit water-use.
(6) User charges, which may include water pricing methods (WPM) and subsidizing of certain water or crop use.
To elaborate on the latter, these charges could be based on different factors (e.g. volumetric based, area based, etc.) and aim to change behaviour, create awareness, and provide cost recovery for the overuse of the resource (Johanssona, et al., 2002). Collection of water charges can be organized through appointing a local authority as a WUA. Different forms of these charges imply different trade-offs between economic efficiency, equity and environmental sustainability. History has shown there may not be one blueprint for water management and therefore the impact of instruments is different based on the local circumstances (Madani & Dinar, 2012).
The revenues of a certain charge can again be used to pay salaries of the WUAs, create appropriate water infrastructure, promote involvement of farmers through subsidizing and education, and to finance recharge mechanisms (Savenije & Zaag, 2002).
18 However, when evaluating management instruments it should be taken into account that valuing water as an economic good ‘is about making integrated choices not about determining the right price’ (Savenije & Zaag, 2002, pp. 99).
The following section will elaborate on suitable management tools for Kaladera and their implementation, based on case studies that show resemblance on environmental, legal, institutional and economical level to the Kaladera case. The focus will be on different types of charging and their influences and trade-offs, for it has been advocated as a market-oriented reform to avert overuse by many authors (Shiferaw, Ratna Reddy, & Wani, 2008; Winpenny, 1992). Therefore, also the connection between charging methods and other tools of demand management will be studied through illustrative cases.
environmental sustainability of the Kaladera region. However for all WPM the impact on these three aspects differ dependent on the context in which the method is implemented. In order to be able to draw conclusions on what method(s) would be suitable for the Kaladera aquifer a comparable case study was performed, in which the results of nine different case-studies were compared. These cases were selected based on their similarity to the Kaladera region. All cases concern a region facing water scarcity and are situated in semi-arid regions. Furthermore, all cases have a research-focus on the agricultural sector, which is, in accordance with the Kaladera watershed, a sector with low liquidity. On the other hand the legal framework and division of authority slightly differ between the cases. Nevertheless this seems to enable investigation of what context characteristics could be beneficial to successfully implement a WPM. These nine cases allowed us to comprehend, distinguish and assess five water demand management instruments including: block pricing, crop-area based pricing, marginal pricing, quota setting and volumetric pricing. These results are summarized in table 1.
WPM - What instruments are out of tune?
Table 1 shows five charging instruments and their consequences when converted from theory to practice. Two main points can be deduced from comparing these instruments.
Firstly, both crop-area based, block pricing and volumetric pricing are flexible pricing methods. The price of water is a direct derivative of either the social costs of water or the capability of a farmer based on his estate. Therefore, these instruments encourage farmers to improve their water-use efficiency, without overburdening them. Hereby, supporting small farmers to maintain in business (Shiferawa, et al, 2008; Varela-Ortega, M Sumpsi, Blanco, & Iglesias, 1998). In contrast, in marginal pricing and quotas the price of water is more rigid and equal for all users. For the direct connection between the amount of money paid and the amount of water-used is obscured, this could even trigger a counter effect of farmers using more water after introducing a WPM in order to cover the increased costs (Yang, et al., 2003).
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Table 1: Water Charging instruments and what can be concluded from comparable studies
Charging
Instruments Theory Practise
Block pricing In block pricing the charge for a farmer reflects the social cost of water, therefore heterogeneity in price exists. With the goal of inducing water demand reduction without burdening particularly family or small-holder farmers with the high costs (Bar-Shira, Finkelshtain, & Simhon, 2006).
Varela-Ortega et al. (1998) found that block pricing tends to inflict minimal income losses of farmers. Secondly, block pricing show little to no efficiency loss in terms of farm output. Finally, it is reported to be more effective in lowering the water demand when compared to an averaged charge (Bar-Shira, et al., 2006).
Crop-Area
based pricing In crop-area based pricing the charge for a farmer discriminates in accordance with the crop water demand. This charge is multiplied by the area the crop is cultivated on. The major goal is to led prices reflect water efficiency and the farmers capability based on his landed estate (Shiferawa, et al., 2008).
Crop-area based pricing would induce implementation of water-saving
technologies and a cropping-shift towards high-value crops with low demand. Furthermore, farmers livelihood is not inevitably affected, when a shift in crops is optional (Shiferawa, et al., 2008).
Marginal
pricing In marginal pricing the charge does not discriminate between farmers. The price a farmer pays reflects the operational costs of water, but may also reflect the scarcity value. These costs will be averaged out over the water-users (Moncur, 1987). This averaging appears to be interpretable
Marginal pricing method was reported to be less effective and efficient in managing the water demand than pricing methods which differentiated in response to the water use. For it led to higher economic losses, a shift to water intensive crops and equity complication (Shiferawa, et al., 2008).
Quotas If the charge is based on a quota the
farmer pays a certain amount determined by the nature of the water-use. With the goal to restrict certain, or all types of water-use. Often this price is paid on annually (Bar-Shira, et al., 2006; Savenije & Zaag, 2002).
Quotas are generally well fitted for cost recovery, on the other hand they are reported to be unsuitable for demand management and increasing water-use efficiency. This is due to their constant nature, for this obscures the relationship between water use and payment (Molle, Venot, & Hassan, 2008).
Volumetric
Pricing In volumetric pricing the charge for a farmer is based on the measured quantity of water used. This
measurement requires a water metre to be installed. Thereafter farmers will pay a uniform tariff per unit of water used (Johanssona, et al., 2002).
Uniform pricing based on the volume of water may have a small influence on impact farmers water use. Nevertheless from developing perspective it is a alarming that mainly poorer farmers are affected most and would even quit
production. (Speelman, et al., 2009; Varela-Ortega, et al., 1998). Futhermore,
installation of a metre is often expensive (Johanssona, et al., 2002).
21 Secondly, the introduction costs of the various instruments differ widely and this has an effect on their ability to use revenues for other purposes, like implementing water-saving technologies or providing positive incentives. The implementation of marginal pricing, quotas or volumetric pricing requires high investments due to the construction of a meter system (Speelman, et al., 2009; Johanssona, et al., 2002; Varela-Ortega, et al., 1998). Implementation of block pricing or crop-area pricing calls for considerably smaller investments and sequential less cost recovery needs to be realized (Shiferawa, et al., 2008; Bar-Shira, et al., 2006).
When searching for a demand management solution for the Kaladera case, block pricing and crop-area based pricing seem most optimal. These forms address equity issues and link them to obtaining economic efficiency (Molle, et al., 2008; Varela-Ortega, et al., 1998), whereas quotas, marginal and volumetric pricing are reported to have led to higher economic losses and sometimes even shifts to more water intensive crops and equity complications (Molle, et al., 2008; Shiferawa, et al., 2008). Also, these last three mentioned require high implementation costs and revenues are therefore focussed on costs recovery instead of changing behaviour (Shiferawa, et al., 2008; Yang, et al., 2003).
Possibilities and pit-falls in determining the price
Trade-offs between economic efficiency, social equity and environmental sustainability are likely to occur when management practises alter. The balance between trade-offs is considered as a major determinant in choosing a charging instrument, and its effectiveness (Shiferawa, et al., 2008). Considering these trade-offs, it is important to recognize that the impact of these instruments on water-use behaviour might be relatively small in comparison to their effects on rural income (Yang, et al., 2003). Higher water-prices promote more water saving technologies to be introduced and more conscious water use, however they increase the financial vulnerability of farmers (Molle, et al., 2008). Since market ability to promote efficiency is limited and disregards equity issues as well as the future value of water (Savenije & Zaag, 2002), it is justifiable to let the government contribute in recovering the resource (Yang, et al., 2003). Therefore dealing with societal concerns should not be left to markets (P. Hellegers, personal communication, November 19, 2014). In addition, these findings strengthen the emphasis on determining an integrated price of the water.
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Initial conditions for successful implementation
All studied cases reveal the need for a specific context in which a WPM should be introduced. Different conditions for this context are mentioned, considering the legal framework of an area, the existence of a WUA, the farmer’s attitude and position, and the implementation of positive and negative incentives.
Legal Framework
Multiple authors mention that in absence of a well-defined water right system, implementation of a WPM may lead to higher water use instead of reducing it (Veetil et al, 2011; Ahmad, 2000; Yang, et al., 2003). Also, farmers highly value, and are willing to pay for a proper water right structure with high transferability of water rights between farmers or WUA’s (Veetil et al, 2011). Finally, the well functioning of a WUA is highly dependent on the existence well defined water rights (Yang, et al., 2003).
Water-Users Association
To optimize the cost-effectiveness of the WPM, an effective management of the water distribution at the project site is necessary (Adekalu & Ogunjimi, 2003). A WUA could be a suitable body to perform this task. However, unhappiness and a lack of trust in the WUA occur frequently, and this is mainly due to poor performances and an absence of transparency (Veetil et al, 2011). Therefore, Adekalu & Ogunjimi (2003) claim that the WUA should be monitored by a supervising body. Moreover, most of the revenues collected by a WUA are used to cover operation and maintenance costs and little to nothing is left for other purposes (Yang, et al., 2003; Dinar & Subramanian, 1998). As a consequence, implementation of a WPM does not always lead to water-saving practices (Varela-Ortega, et al., 1998).
Acceptance and Involvement
Several authors have emphasized the importance of farmers acceptance and participation for the success of any WPM (Veetil et al., 2011; Molle, et al., 2008; Adekalu & Ogunjimi, 2003). Through combining WPM with other water demand management tools (Veetil et al., 2011) and education of farmers (Adekalu & Ogunjimi, 2003) the potential success of a WPM to manage the water demand can be increased considerably. Also,
23 Varela-Ortega et al. (1998) concluded that traditional water districts, with higher water allotments, are more elastic than modern districts, with low water allotments and higher technological efficiency. Since most of farmers of the Kaladera watershed are practicing traditional farming methods, it has a large potential for water efficiency gains.
Positive & Negative Incentives
Finally, it is advised to co-implement positive incentives. For these reduce capital and risk constraints, offer attractive cropping alternatives and exit options, with compensation in conjunction with higher prices. This is especially important when regarding equity and efficiency (Molle, et al., 2008). Shiferawa, et al. (2008) further suggest that adaptation of water charging does not stand alone, because it requires alteration of distorting policies, a great monitoring capacity and removal of subsidies on power and water-intensive crops.
Altogether, several lessons can be learned with its implications for the Kaladera case. Three major determents can be distinguished for the appropriate WDM approach. These are summarized below, in figure 5.
Although the Kaladera context knows more sectors than agricultural alone, this sector is the major water-user 91% of the water use (Karnani, 2012). Nevertheless integrating water management over stakeholders inevitably means over sectors, therefore including the industrial sector. However the water-using nature of these two sectors, as well as domestic-use, differs tremendously. Which can result in a unintentional or even counter management output than aimed for. Equity problems, economic damage and environmental degradation may result from such a practise. Therefore implementing a general water-valuing instrument for all stakeholders is not to be desired (Savenije & Zaag, 2012; Shiferaw, et al., 2008). Nevertheless, science appears to have neglected research toward water demand management practises applicable to the industrial sector. Therefore it is recommended to elaborate on this subject in anticipated research.
From theory to practise
History has shown there may not be one blueprint for water management and therefore a management system must be suited to local circumstances (Madani & Dinar, 2012). Accordingly, the recommended management implications should be considered with caution. While epistemically concepts and implications are probable to suit the Kaladera context, this literature research has not got the additive information of local empirical research in Kaladera. In practise management outcomes may show incongruence with the management objective (Ison, et al., 2007).
As the literature has shown, an implementation gap between science based research and policy development often exists (Ison, et al., 2007). This may result from the fact that an integrated approach aims to comprehend the complexity and uncertainties of a system. This often leads to encountering ambiguity, for the simultaneous presence of more than one interpretation on the nature of the problem (Pahl-Wostl et al., 2007). To advert this ambiguity it is important to recognize the different perceptions and interests, plus a clear statement of system and management uncertainties. In the Kaladera context this can be translated to the uncertainties of human reflexive behaviour, -to what extent will demand be shifted? -, but also stochastic uncertainties such as the impact of climate change on rainfall patterns.
implications in the face of increasing water scarcity in the Kaladera region, India. The interdisciplinary problem of this area influences simultaneously sustainability, equity and efficiency. Currently, the region is characterized by over-extraction due to deteriorating environmental circumstances and mismanagement. As a result the resilience deteriorated over the last few decades, which features the system by low diversity, flexibility and high vulnerability for disturbances.
To promote sustainable use, alteration in water management is needed in Kaladera to guide a transition of the water-use behaviour. WDM is considered to be a valuable approach in obtaining sustainable use. The aim of WDM is to increase multi-actor participation, alter water-use behaviour, and balance trade-offs by selecting a suitable water-charging instrument. In the process of charge determinations, the main focus should be on cost recovery and behavioural changes, not setting the right price (Savenije & Zaag, 2002). Hence, the charge should not emphasise either on efficiency, equity or environmental sustainability. For this can result in a counter-effect by for instance overburdening small-farmers, or the adoption of undesired farming practices. In addition, we underscore that the linkages between the different WDM tools are of utmost importance, and one tool should not be implemented without consideration of other tools. Thereby we submit that implementation of water charges, in concert with other coordination mechanisms, has the potential for averting the pending resource crisis in Kaladera. Therefore monitoring and evaluating the implementation is strongly recommended (Ison, et al., 2007).
In order to successfully implement a water-charging instrument in Kaladera a number of context requirements need to be met. These include establishment of a legal framework, the existence and monitoring of a WUA, farmers participation and acceptance, and the implementation of both positive and negative incentives. These conditions will enhance resilience by their reinforcing impact on adaptation- and learning capacity. Furthermore, the contextual requirements differ per charging instruments.
In pursuing a balance between efficiency, equity and environmental sustainability the comparison of the cases revealed that block pricing and crop-area based pricing are
26 most suitable for the Kaladera context. Firstly, these instruments are characterized by large flexibility of prices, and connectivity between water-use and water-charge. Resulting in increased adaptation by farmers. Secondly, they have low implementation costs and are therefore successful in obtaining cost recovery. Furthermore, they enable low user-charges and the provision of positive incentives.
To sum up, a transition in water-use is crucial to protect the livelihood of the inhabitant as well as the ecosystem of Kaladera. Therefore alteration to the management system and setting water-charges are of major importance in guiding this transition. However equity issues are often a decisive element in decision-making. For this reason, management adaptations should recognize the diversity in farmers’ abilities and decide on a corresponding demand management tool with low additional costs and a focus on farmers’ participation and adaptation, in order to support sustainable use in all different sub-systems. Creating a balance, by giving positive incentives, and monetary governmental contributions in implementations is important in this process. Successful implementation will have a positive feedback on the capacity to learn and adapt, and therewith on the resilience of the Kaladera region. To conclude, if the contextual criteria are met, implementation of WDM instruments, advisably block pricing and crop-area based pricing, will stimulate a transition toward sustainable use of the Kaladera watershed.
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