Revisiting Groundwater Depletion and its Implications on Farm Economics in Punjab, India

The study identifies factors behind the groundwater depletion in Punjab (India) and examines the economics of groundwater irrigation across farm-size categories, varied groundwater levels and energy policy scenario. The farm-level evidences point out that farmers with smaller land holdings incur 2-3 times groundwater cost than those with larger land holdings. Also, small farmers are affected more adversely due to falling groundwater level. Further, financial expenses in extracting groundwater are borne equally by the society and the farmers. The withdrawal of energy subsidy is expected to reduce net returns, but at a varying rate across different crops. However, crop cultivation would still be profitable and desubsidization will result in 29-82% savings in existing groundwater use in different crops.