Tube-well irrigation, through modern water extraction mechanisms (WEMs), has been vital to food security and sustainable livelihoods in India. However, due to skewed distribution of WEMs towards large farmers on account of huge investment needs, small and marginal farmers have to rely on owners of WEMs for irrigation water. This has resulted in the emergence of informal water-markets. The present study has examined the groundwater extraction and water-use efficiency under different water-market regimes in the Central Plain Zone (CPZ) of Uttar Pradesh, where water-intensive cropping pattern is followed. The study is based on the primary data collected from 100 farmer-households of Central Plain Zone in the year 2007. Most of the farmers in the study domain are small and marginal, having less than 2 ha land. These resource-poor farmers buy water from the WEM–owners. Thus, groundwater market has been found to provide them easy accessibility to irrigation water and helps them in realizing better yields. The popularity of water-intensive crops, such as paddy, wheat and sugarcane, is responsible for the depleting groundwater tables in the region. Estimates of Data Envelopment Analysis (DEA) have shown that both buyers and owners of WEMs are technically inefficient in water–use, as the actual use of irrigation water has been found much higher than the optimum level. However, ‘Buyers have been found comparatively more efficient than ‘Owners’ in water utilization. Overexploitation of groundwater resources raises concerns about the future sustainability of agriculture. It is, therefore, becoming increasingly important that groundwater is used efficiently and groundwater market can emerge as a better tool for improving the efficiency of irrigation water across farm-sizes and crops. Based on the results, the study has made some policy suggestions also for an equitable and sustainable development of agriculture in the region.


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