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Using Market Mechanism to Stimulate Sustainable Use of the Non-
renewable Environmental Resource, Groundwater in the North-Western
Bangladesh.
Anutosh Das1,2, Sumaia Kashem3, Mahmudul Hasan4
1. Department of Urban Planning and Design, The University of Hong Kong, Hong Kong.
Email: anutosh@hku.hk
2. Department of Urban and Regional Planning, Rajshahi University of Engineering &
Technology, Bangladesh. Email: anutoshbuet@gmail.com; anutosh@urp.ruet.ac.bd
3. Bangladesh University of Engineering and Technology, Bangladesh.
Email: dola.sumaia@gmail.com
4. Department of Urban and Regional Planning, Rajshahi University of Engineering &
Technology, Bangladesh. Email: mahamudul.ruet@gmail.com
Abstract
Agriculture, the main economic driver of North-Western Bangladesh is highly dependent
on groundwater due to prevalent surface water paucity. Notwithstanding, water is an ill-
managed resource in this region. Farmers are using it capriciously due to its low or no actual
monetary price that makes it becoming scarcer. Therefore, this particular research attempts to
determine an effective market based water pricing mechanism to encourage the optimal use of
the non-renewable scarce resource. Required database was collected through an amalgamation
of quantitative and qualitative techniques e.g. structured questionnaire survey, focus group
discussion, contingent valuation method, expert opinion survey and literature works
subsequently. The results reveal that depletion level has arrived at 20, 11, 7.5 feet respectively
in high, mid and low tract in the last 22 years, which furthermore results into a number of
associated externalities in the area. The research proposes a pricing mechanism incorporating
cost of resource degradation externalities highlighting marginal cost of extraction. With its
implementation, the prevailing consumer practices can be modified and the quantity of
consumed water can be reduced substantially. The research is an initiatives to determine
efficient pricing mechanism to accelerate the conservation of the valuable groundwater
resource for future generation by managing consumer practice.
Keywords: Groundwater, Non-Renewable Resource, Marginal cost of extraction,
Consumer practice, Cost of resource degradation externalities.
Introduction
In 1978-79, a widespread drought reduced rice production by 2 million tons and directly
affect 42% cultivated land and 44% population in Bangladesh. Not only in that year, 19 more
times in last 50 years, drought has affected seriously dreadful damage to the farm sector directly
(Banglapedia, 2014). The hot, humid climate with low rainfall and low moisture in the soil
causes surface water paucity which makes people fully dependent on groundwater for survival
of farm sector. A significant change has been observed in the dependency of surface water to
ground water from 1970 for irrigation purpose (UNDP, 1982) to overcome the loss of crop
damage due to drought which results into increase in groundwater use. About one fourth of
world’s irrigated land is delivered groundwater among which 75% of these lands are falling
under Asia (Shamsudduha et al, 2011; Rahman and Mahbub, 2012). Availability of
groundwater for irrigation has contributed to manifold increases in crop productivity of
Bangladesh. But from another point of view, the groundwater has become free access common
pool resource due to its extraction by many user at a time and that eventually leads to the
tragedy of commons. The unfortunate fact is that the communities sharing this common pool
resources is paving the way for their own destruction because whenever a product is free or
undervalued, it promotes misuse rather than efficiency of use (Hardin, 1968). Moreover, the
uncontrolled use of water has been accelareted due to irrigation maintained by subsidized
electricity in farm sector which in terms leads a severe decline to the valuable environmental
resource (Kumar et al, 2007 and Rahman and Mahbub, 2012). In that case, Market can be
effective means of protecting environment by endorsing efficient market based incentive.
Water pricing has indicated as an effective market based incentive for improving water
allocation and reducing water consumption (Perry, 2001; Bosworth et al., 2002; Johansson et
al., 2002.; Easter and Liu, 2005; World Bank, 2006). But in real field, the conventional water
tariff system which is based on only the marginal cost of extraction, supports very negligible
price. The existing policy of setting a low price for water can’t generate the proper incentives
to reduce water consumption (Ahmad, 2000) where the main goals of irrigation regulatory and
pricing systems should be equity and efficiency (Seagraves and Easter, 1983). Multiple authors
have also ensured about the positive effect of an increase in the water price on the
implementation of water conserving irrigation technologies by farmers (Kanazawa, 1994,
Caswell and Zilberman, 1985, Caswell and Zilberman, 1986, Afroz, 2010). In order to achieve
efficient and equitable use, and conservation and protection of water resources, it is necessary
to treat water not only as economic good but also as social good (Dinar and Saleth, 2005).
But this is not happening in real field. As a result, the dynamic inefficiency makes one of the
most valuable resource groundwater becoming scarcer day by day as the stock is not unlimited.
Particularly in northwest region in Bangladesh named as Barind tract, the geographical
condition isn’t favorable for agriculture production due to low rainfall, warm and hot climate
and more specifically drought experience. Water bodies in this areas are going dry, river beds
are filled in with sand, and water flow in the river is decreasing during the dry season and make
the people completely dependent on groundwater (Shahid and Behrawan 2008, Shahid 2011)
which is abstracted by BMDA. A BADC survey (2002) reported that the contribution of
groundwater has increased from 41% in 1982-83 to 75% in 2001-02. Later it has reached 77%
in next two years. But the increasing irrigation demand of overwhelming population, food
insecurity, and uncontrolled water withdrawal for irrigation and below average rainfall are
putting unprecedented pressure on groundwater that triggered the ground water level falls
to the extent of not getting fully replenished in the recharge season. (Shahid and Hazarika,
2010). As a result, groundwater table in the northwest region is gradually declining (Rahman
and Mahabub, 2012; PRIO, 2012; Ahmeduzzaman et al, 2012; Aziz et al., 2015) and the rate
of falling water table has increased to 2 feet a year in Barind area. The overuse of groundwater
will therefore remain crucial to sustain agricultural growth to meet Bangladesh’s future food
supplies. (Qureshi et al., 2015). Unfortunately, the farmers are using groundwater more than
requirement due to its low price. Therefore, it is imperative to evaluate effective pricing options
in accordance with scarcity for its sustainable management.
But, the former literature aren’t specific to evaluate an effective pricing mechanism for
the proper use of the ground water in northwest region of Bangladesh. Hence, the study wishes
to document current groundwater depletion status in Barind tract and hence determining the
efficient ground water pricing mechanism that not only contribute to the agricultural sector
development for marginal labor but also preserve right for future generation by reducing over-
use of groundwater.
Literature Review
The scarcity of water which in terms results in to drought has been one of the serious and
dreadful calamities in northwest region of Bangladesh. Twelve moderate to extreme
agricultural droughts are experienced in the years 1972, 1975, 1979, 1982, 1986, 1989, 1992,
1994, 2003, 2005, 2009 and 2010 and the no of drought is increasing gradually (Rahman et al,
2017). Rahman et al. (2017) marked groundwater irrigation as vulnerable to drought for
reduction of soil moisture in excessive level. Being largest user of groundwater for agricultural
irrigation, increasing demand for water results into groundwater drought in arid and semi-arid
regions in South Asia. The long term and continuous extraction of Groundwater exceeds
aquifer recharge and produces declining trends in aquifer storage and hydraulic head (Zektser,
et al., 2005). Moreover, Adhikary et al. (2013) has also tried to find the reason of drought in
north western region. For this, the study used Cumulative Deficit approach to evaluate drought
severity and CD values are interpolated in ArcGIS to prepare GW drought maps while
Standardized Precipitation Index (SPI) method computes meteorological drought. The study
specified that a significant declination is observed in GW table from the GW hydrographs for
excessive withdrawal of GW which is mainly responsible for GW drought in northwestern
region in Bangladesh. The deficiency of rainfall may turn the GW drought into meteorological
drought but the first step of it is mass withdrawal of GW. However, Zahid and Ahmed (2006)
has identified the causes of withdrawal of GW in the Barind region in their research by benefit
cost ratio analysis. To overcome the problem of unfavorable agricultural section of this region,
Barind Integrated Area Development Project (BIADP) has been undertaken by BMDA since
1986 which ensured groundwater fed irrigation through installation of DTWs. The increase in
DTWs manifested yield of Boro rice from 43 to 120% and other cropping intensity increased
59% in 10 years. But the extensive use of GW for irrigation is claimed as responsible for
continuous decline of water level which demands urgent management of groundwater resource.
Qureshi et al. (2015) also identifies that the water policy prevailed in Bangladesh focuses on
development rather than management of resources. Though increased groundwater
accessibility accelerates the crop production but in long term it is responsible for degrading the
environment. Mass abstraction of groundwater causes many externalities such as excessive
drawdown in intensively irrigated areas, depletion of groundwater level etc. However, they
emphasized on reduction the pressure on groundwater before the problem becomes either
insolvable or too costly to remediate. It is suggested by many authors that to ensure sustainable
consumption, water pricing can be an important incentive (Perry, 2001; Bosworth et al., 2002;
Johansson et al., 2002; Easter and Liu, 2005; Kemper et al, 2006). Moreover, Bazza and Ahmad
(2002) has also marked it as key instrument for ensuring improved better conservation and
quality preservation in their study. According to the Fourth Principle of the 1992 Dublin
Statements, setting up ‘efficient’ water pricing policy by treating water as economic good is a
prerequisite to achieve equitable use and for conservation of water resources. As it is evident
in the study of Samal and Kolanu (2004), underpricing of irrigation water can results in waste
of water, inadequate cost recovery, Improper O & M, environmental degradation etc. They
indicated waste of water as the major cited problems occurred by underpricing. Ahmad (2000)
also mentioned that the policy or setting a low price sends wrong signals to the producer and
consumers about the true scarcity value of resources which often leads to over-consumption of
commodities which are main reason for resource degradation. Pricing water consumption
correctly can be an important means for managing their wrong practice. Through increasing
water prices in accordance with the established rules of economic theory (Rogersa 2002),
reduction in waste of water can be attained. Thus increase in water price can be an important
incentive for sustainable use of irrigation water.
The undervaluation of the valuable resource groundwater prevails also in Bangladesh is
apparent in the study of Kemper et al., (2004). Yet the main economic sector (farm sector) of
this country depends on GW. The existing price only covers installation cost and O&M cost
but rarely the cost of externalities. Thus paying a part of the cost, the exploiter receives all the
benefits of groundwater that in terms is accelerating misuse and exhausting the GW stock.
Authors emphasized on economic considerations to manage the current practice of
consumption and promote more efficient resource use. The research highlights the react of
human beings to price incentives (when prices are high less resource will be consumed) and
proposes incorporating the cost of degradation externalities into price for efficient allocation
over time. Reddy (2005) has measured costs of groundwater depletion externalities in his study
of Andhra Pradesh, India for the first time. The paper attempts to estimate the costs of
groundwater over exploitation and signifies how groundwater exploitation in Andhra Pradesh,
India is resulting in economic losses to individual farmers apart from ecological degradation.
He demonstrates that costs of degradation externalities are disproportionately born by these
farmers as the cost is measured on the basis of classification of farmers. Finally the research
concludes recommending some policy issues to reduce the degradation without focusing on
suggestion of efficient water pricing mechanism.
Concerning about above studies, the research attempts to integrate cost of externalities
into existing pricing for efficient use of the groundwater. To the best of our knowledge, this is
the first study that attempts to determine efficient pricing mechanism to accelerate the
conservation of the valuable non-renewable resource groundwater using price elasticity.
Research Area and Methodology
The prevailing uncongenial and unsuitable factors for surface water availability such as
geology, rainfall, soil properties results in higher dependency on ground water for irrigation
(90-95%) in north western region of Bangladesh.
Figure 1: Map of the Study Area
Source: BMDA, 2018
On the basis of elevation, BMDA has classified the total Barind tract into three classes;
High, Mid and Low tract among which one upazila is randomly selected from each tract for
experimental approach. They are godagari (High tract) and partial bagmara (Mid tract) upazila
of Rajshahi district and Naogaon sadar upazila (Low tract) of Naogaon district.
For completion of the research, secondary data is collected from Barind Multipurpose
Development Authority (BMDA), Department of Agricultural Extension (DAE) to obtain the
proper knowledge about the current groundwater status and existing water pricing mechanism.
It includes yearly database of ground water table, total cultivable land, net irrigated area, no of
deep and shallow well for the time period (1996-2017), data related to existing water pricing
mechanism etc. Moreover, the main objective of the study is to propose an effective pricing
mechanism that is basically based on literature review and field data. After enormous review
of literature, a reconnaissance survey is made to identify the externalities of mass groundwater
abstraction in the context of Bangladesh. The decline in Paddy area, crop shifting pattern, the
investment of lifting well in to lower level of ground due to depletion etc. are some of the
externalities considered in the study. It requires several field visit to the three selected upazila
for questionnaire survey with 120 sample including the pump owner, farmers, water buyers
who are directly or indirectly involved in water use for irrigation. Additionally, three FGDs of
8-10 members is carried out in three different upazila to have clear concept about some issues
such as shifting in crop pattern, net benefit of the farmers, types of major crops, changes in
types of crops over time period etc. After the price has been set out through the proposed pricing
mechanism, Delphi method is used for obtaining expert opinion about the feasibility of the
model. No of experts is four including two economist and one sociologist and one agricultural
personnel. At last, Contingent Valuation Method (CVM) is conducted with 50 sample to
stimulate ‘Willingness to Pay’ extra amount for water to reduce depletion.
Current Groundwater Status in Study Area.
To meet up the demand of surface water, use of groundwater is increasing more and more
in this region that makes the water table fallen in the northwest region gradually over years
(Rahman and Mahabub, 2012; PRIO, 2012; Ahmeduzzaman et al, 2012; Aziz et al., 2015).
The declination in ground water level is measured by testing hypothesis. The GW level data
was used as a sample to derive descriptive statistics of mean, standard deviation using the value
for the periods of 1996 to 2017. According to the common consideration for using normal
distribution in testing hypothesis, one tailed t distribution formula is used in the study for
having sample size (22 years) less than 30 with 95% confidence interval. The ‘t statistics’
analyses of data of water level of each of the upazila separately show that the average water
level varies from area to area on the basis of high, medium and low tracts but in all cases
depletion is common. That groundwater level in the study area is depleting in an accelerating
rate over the time can be revealed by the depletion trend of maximum and minimum water level
in last 22 years in each of the zone. The water level varies from 46 feet to 80 feet in high
Table 1: Season-Wise Fluctuation Rate of Average Water Level (1996-2017)
Source: BMDA data, 1996- 2017
Study Area
Godagari
Bagmara
Naogaon Sadar
Season
Summer
Monsoon
Winter
Summer
Monsoon
Winter
Summer
Monsoon
Winter
ground water
level in 1996
68.03
47.13
42.25
26.44
7.37
15.19
23.833
11.35
15.27
ground water
level in 2017
74.75
70.02
68.17
45.54
15.54
23.93
31.276
17.21
20.25
Differences in
feet
6.72
22.88
25.92
19.09
8.17
8.75
7.44
5.86
4.97
Time period
(year)
22
Fluctuation in
feet/year
0.31
1.04
1.17
0.87
0.37
0.40
0.34
0.86
0.226
tract Godagari area, from 28.36 ft. to 12.15 ft. in mid tract Bagmara area, and from 14 to 25
feet only in low tract Naogaon Sadar area.
However, from the climatic point of view, the declination extent is measured on the basis
of three season, 1) the hot summer season from March to May, 2) the wet monsoon season
from June to October and 3) the dry winter season from November to February (Shahid &
Hazarika, 2009). The declination extent of ground water level is not indifferent in all season.
The higher fluctuation is observed in dry winter season in high tract region but in hot summer
season in mid and low region.
New Pricing Mechanism to Reduce Depletion
The proposed pricing mechanism focuses on incorporating Cost of Resource Degradation
Externalities into the price for water to ensure optimal use of scarce environmental resource
ground water. It can be described as,
Where, IC= Installation Cost of DTW, O&M Cost= Operation and Maintenance Cost, and
CRDE= Cost of Resource Degradation Externalities.
The installation cost of DTW including all the associated costs during installation (price
of pump set, pipe, filter and other equipment, labor cost, cost of electricity connection) is
calculated using the formula of present value of annuity.
,
PVAn = Installation cost - Resale value after expiry
The priority is given to the maximum used pump and housing head of each tract for
calculation of depreciation value. It is calculated with 10% discounting rate and n is considered
as average economic life of a DTW (30 years) (Amin, 2007). The annualized depreciation cost
is divided by average command area of a DTW and total hour of discharge (in year) to get the
unit depreciation cost.
The O&M cost is calculated as,
The information are collected from BMDA office to find out their actual cost to run a
DTW one hour. However, depending on the fuel cost the O&M cost varies according to tract.
For example, DTW of the 21m head consumes 17 unit electricity per hour (for mid and low
tract) where in case of high tract, the greater head consumes 20 unit of electricity.
Ground water table depletes because the water is extracted beyond optimum recharge
level and sometimes led to be lifted up the existing well into lower level. This investment of
lifting well in to lower level of ground can be regarded as direct cost. Direct cost is one time
cost to lifting up the pump and install it in to lower section. But it will increase with time along
with the no of well dried and need to be lifted. Indirect costs are incurred due to decline in
paddy area and the crop shifting pattern due to water scarcity (Reddy, 2014). The cost will
increase with the depletion of water level. The CRDE is measured using following procedure;
Due to data unavailability, the ‘t’ time period is considered as 17 year (from 2001-2017).
And the differential net return is estimated by subtracting the net return of the crops that
replaced paddy from the net return from paddy. The net return of the crops are calculated by
weighted average of profit on the basis of proportion of area under crop. The decline in paddy
area are used to estimate the losses from crop shifting pattern (Reddy, 2014). All the cost are
calculated in BDT/hour unit. The zone-wise water price is estimated using above stated formula
separately for each zone.
Table 2: Estimated Price Using Proposed Mechanism
Source: Author’s Calculation, 2018
Model Validation and Calibration
The model can be validated and calibrated from three points of view such as the
economics point of view, the view of consumers, and the view of producers.
From the View of Economics,
Under this mechanism, the price has become slight higher than existing one. The small
increment in price of GW saves several hours of consumption in all tracts of the study area.
Due to GW layer depletion over time, it needs to suction water from deeper layer than earlier.
From the economic point of view, and the consumption decreases with the increasing cost of
groundwater with time. Hence the demand curve is downward sloping. The proposed price will
reduce consumption time 185, 117, 216 hours in a year in high, mid and low tract zone
respectively. However, it should be noted that the reduction in consumption time is not fixed
in all similar tract because it depends on the demand function of consumption time in any area.
It is already stated that this study focuses on maximum used pump of any tract from which the
quantity of consumed water is measured. The maximum suction power of pumps in high, mid
and low tract zone are 0.75, 1.5, 1.75 cusec respectively. Corresponding Figure 2, the quantity
of consumed water will be reduced 14190.4 m3, 17759.59 m3 and 38510.6 m3 in a year in high,
mid and low tract area respectively with the implementation of proposed price.
Zone
Existing Price (BDT/hour)
Proposed Price
(BDT/hour)
High tract
148
161
Mid tract
125
142.5
Low tract
125
139
Figure 2: Reduction in GW consumption
Source: Authors Calculation, 2018
0
50
100
150
200
250
0 5 10 15 20 25 30
Price/hour
Quantity Consumed ( ×10⁴ m³)
Reduction of Consumption in High tract(Godagari)
demand
curve
MC
MC+UC
7.6
9.2
0
50
100
150
200
250
300
0 5 10 15 20 25 30
Price/hour
Quantity Consumed ( ×10⁴ m³)
Reduction in Consumption in Mid tract
Demand
curve
MC
MC+UC
1
5.8
1
4.1
0
20
40
60
80
100
120
140
160
180
200
0 5 10 15 20 25 30 35
Price/hour
Quantity Consumed ( ×10⁴ m³)
Reduction in Consumption in Low tract
Demand
curve
MC
MC+UC
15.7
11.87
14.1
15.8
It can be noted from agricultural professionals that the less consumption of irrigation
water doesn’t reduce the profit if the modern agriculture is applied. Lack of proper knowledge
is one of the main reason for misuse of water in Barind Area. In Bangladesh, Boro rice
cultivation is still largely done in a traditional way by applying and maintaining flood irrigation
something like ‘the more water, the more cultivation’. Although studies have shown that
keeping Boro rice fields moist but not flooded 3-4 days after the disappearance standing water
did not reduce yields. Moreover, the choice of appropriate crop is very much necessary for
sustainable agriculture.
Moreover, in the mainstream economics, with the increase in price of any product, the
consumer surplus reduces and producer surplus increases. In this study, in trade of GW, the
consumers are the water user mainly farmers and producer is water supplier organization
BMDA. Higher GW prices due to proposed mechanism do not necessarily lead to a net loss in
economic welfare, rather to reduction in use of GW and a shift of resources from GW
consumers to GW producer due to reduction in consumer surplus and increase in producer
surplus. But in trade of nonrenewable environmental good, the producer surplus need not to
increase always with establishing higher price. In fact, the higher price results into social
welfare gain discouraging the misuse of nonrenewable resources through setting up higher
price (Wiser et al., 2004). With the implementation of the proposed price, the consumer surplus
will reduce from 3.91 million Tk. To 2.73 million Tk. Again the producer surplus will reduce
up to 1.38 million. In return it reduces up to 14190.4 m3 water consumption in high tract of
which environmental value is higher than this small amount of producer surplus. Thus the total
surplus (sum of the consumer surplus and producer surplus) increases if the environmental
benefit value of reduction of misuse is added with it. Likely, consumer surplus decreases up to
2.6 and 1.38 million Tk. in mid and low tract zone respectively. In low tract zone, it decreases
from 8.9 million Tk. to 6.75 million Tk. due to proposed higher price.
From Consumers’ Point of View,
It is already stated that ground water is highly used for irrigation in the Barind Area.
Farmers cultivate variety of crops in their land in different season such as Kharif 1(Mid-march
to mid-July), Kharif 2(Mid-July to mid-November) and Rabi season (Mid-November to mid-
march). They cultivate Aus rice in Kharif 1 season and Amon rice in kharif 2 season. The
variation generally occurred in Rabi season due to variety of options of crop. Though farmers
are shifting into different Rabi crops such as Maize, Potato, Wheat because high requirement
of water for Boro Rice results high cost of Boro Rice cultivation. Notwithstanding Paddy
(kharif as well as Rabi) is main crop in Bangladesh and the percentage of Boro cultivation is
higher than other Rabi crops. However, as the amount of water required varies according to
crop, the price increment has a significant impact on the irrigation cost. It has increased with
the increment of existing price through proposed mechanism in every zone. The irrigation cost
(per Bigha) is calculated by multiplying irrigation frequency with cost per irrigation. The
increase of Irrigation cost is represented through the comparison between Existing irrigation
cost and proposed irrigation cost for high, mid and low tract zone.
Table 3: Increasing Effect of Proposed Price on Irrigation Cost
Source: Authors Calculation, 2018
Criteria
High
Mid
Low
Existing
water cost
Proposed
Water Cost
Existing
water cost
Proposed
Water Cost
Existing
water cost
Proposed
Water Cost
Rice
2886
3120
1625
1852.5
1625
1807
Rice&
Potato
1665
1800
937.5
1068.75
937.5
1042.5
Rice and
Wheat
1665
1800
937.5
1068.75
937.5
1042.5
Rice and
Maize
1887
2040
1062.5
1211.25
1062.5
1181.5
With the price increment of the groundwater used for irrigation must have an impact on
the farmer’s profitability. The farmer’s profitability is inversely related with the cost of the
water. As the cost is increased in some amount for the proposed pricing mechanism, the profit
of the farmers is reduced with the cost increment. The comparison in the profit margin per
bigha for the existing and the proposed mechanism is shown in the Table 4.
Table 4: Reduction in Profit of Farmers
Crops
cultivated
High tract
Mid tract
Low tract
Earlier
Profit
(BDT)
Present
Profit
(BDT)
Earlier
Profit
(BDT)
Present
Profit
(BDT)
Existing
Profit
(BDT)
Present
Profit
(BDT)
Rice
22000
21766
24000
24227.5
28000
27818
Rice &
potato
28400
28265
30700
30831.25
36200
36095
Rice & wheat
23100
22965
25700
25831.25
32200
32095
Rice &
Maize
24600
24447
26700
26848.75
29200
29081
Source: Authors Calculation, 2018
The farmers’ profitability is also dependent on their cultivated crops due to crop-wise
different water requirement. There net profit of cultivating other Rabi crops is higher than
Figure 3: Crop-wise Average Profit
Source: Questionnaire Survey, 2018
22000 24000 28000
28400 30700
36200
23100 25700
32200
24600
26700
29200
0
5000
10000
15000
20000
25000
30000
35000
40000
High Mid Low
Cropwise Average Profit
Rice
Rice &
potato
Rice &
wheat
Rice &
Maize
cultivating Rice in all season in all of the tract. Hence the crop shifting from traditional Rice to
Rabi crops doesn’t result into loss of income of farmers. Moreover, the reduction in profit
money is not very high for the farmers working in one bigha land comparing with their net
benefit. So, it can be said that the farmers will not be unwilling to pay the increased money if
their profit always meets the margin described here. Majority of the respondents (72%) stated
that they are willing to pay extra amount for the preservation of ground water. The marked
reasons behind unwillingness are not getting actual price in market (54%), their doubt on the
reliability of service(34%) etc. While the farmers who said yes to WTP marked some reasons
such as, the price of private semi deep well was much higher than BMDA provided DTW
(32%), their dependency on groundwater (68%). However, the major drawbacks of this CVM
method is that people tend to overestimate their willingness to pay especially if they know that
they are not going to do the actual payment.
Figure 4: Willingness to Pay and The Reasons behind The Decision.
Source: Contingent Valuation Method, 2018
From Producers’ Point of view
Though the increased cost of water has a less impact on the individual farmer’s
profitability, grossly it has a great impact on the revenue that the government can earn from
the price increment. The gross profit for each crop can be calculated by multiplying the total
cultivated lands under the crop to the irrigation frequency and the price increment per irrigation.
However, the total gross revenue varies from the one tract to another because of the varying
cultivated lands for different regions and the cost incurred differently in high, mid and low
area. For each tract, the total gross profit for all the crops add a very high amount of revenue
in the government account. For instance, it brings about 0.33 million US dollar in a year from
high tract Godagari Upazilla. From mid and low tract, government will earn approximately
0.35 and 0.13 million US dollar respectively.
The gross profit earned by the BMDA office (government) is not a minor amount. For
present and uncontrolled consumption, when the water table deplete in such as level, that the
marginal cost of extraction will be greater than benefit, then exploration of alternative solution
is a must. Considering this, this opportunity cost must be invested to create alternative solution
and reduce the pressure on groundwater. Some of the recommendations are explored from
Expert Opinion Survey such as increasing rainwater storage capacity, provision of subsidy to
balance market equilibrium, developing storage capacity of surface water, green technology to
develop the surface water irrigation etc.
From The View of Social and Environmental Context
The proposed mechanism not only influences the economic sector but also has a
significant impact on social context in broader term. The amount of increment will not matter
in individual level while it brings a gross revenue on the account of Government. Being a water
scarce region, crop shifting towards cultivation of Rabi crops doesn’t results into net losses.
Farmers earns more profit using less water. That is not only profitable to farmers but also
beneficial approach in water scarce region by less water consumption. Along with the less
consumption of water, the consumption of electricity also reduces as Deep Tube Well are
operated by electricity. The less water extraction, the less depletion of GW layer, the less
scarcity of water. That basically decrease in cost of externalities incurred due to GW depletion.
It will be also useful for long term sustainability of agriculture. As if the depletion continues,
there will be no water in future consequently the backbone of country “Agriculture sector” will
collapse.
Thus the implementation of the pricing mechanism may cause a little decline in profit
but in long term it actually benefits farmers most. Because with the lowering of water table,
the cost of extraction becomes larger which in future will be a burden upon them. Moreover, it
is necessary to increase awareness about how applying modern agriculture they can reduce
water use without hampering crop production.
Conclusion
In the Barind region, groundwater declination is not only happening due to deficit of
rainfall, but also due to overexploitation of this resources. The increasing demand of
groundwater for agricultural based subsidized project is one of the main reason for this
overconsumption. Concerning this, the main objective of the research is to analyze the current
GW depletion status and on that basis proposition of a pricing mechanism for ensuring
sustainable consumption of water. The depletion water level varies from 46 feet to 80 feet in
high tract Godagari area, from to 12.15 ft. to 28.36 ft. in mid tract Bagmara area, and from 14
to 25 feet only in low tract Naogaon Sadar. Considering this high depletion the research has
proposed a new pricing mechanism where the uniqueness of the mechanism is incorporating
cost of externalities due to GW depletion. The new price applying the mechanism is slight
higher than existing one. Though the cost of the ground water is increased slightly and reduces
the farmer’s profitability in some instance, the farmers as well as the whole country will have
some gain from the price increment in the long run. For example, with the implementation of
proposed price, the quantity of consumed water will be reduced 14190.4 m3, 17759.59 m3 and
38510.6 m3 in a year in high, mid and low tract area respectively. Moreover, government will
earn approximately 0.33, 0.35 and 0.13 million US dollar respectively from high, mid and low
tract. Further this gain can be used to create alternative solution and reduce the pressure on
groundwater. At the end, the research offers but a sort of pricing mechanism which can be
applied in any arid area like Barind region. It is expected that this research work will be very
helpful for the management of the most valuable environmental resource groundwater by
controlling the unsustainable and careless consuming practice of people.
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