Publication:
Over-Drilling: Local Externalities and the Social Cost of Electricity Subsidies for Groundwater Pumping

Simple item page
dc.contributor.authorBueren, Jesus
dc.contributor.authorGine, Xavier
dc.contributor.authorJacoby, Hanan G.
dc.contributor.authorMira, Pedro
dc.date.accessioned2023-07-17T23:30:36Z
dc.date.available2023-07-17T23:30:36Z
dc.date.issued2023-07-17
dc.description.abstractBorewells for groundwater extraction have proliferated across South Asia, encouraged by subsidized electricity for pumping. Because borewells operating near one another experience mutually attenuated discharges and higher failure rates, farmers deciding whether and when to drill interact strategically with potentially many neighbors through the spatial network of agricultural plots. To incorporate such interactions in policy counterfactuals, this paper estimates a dynamic discrete network game of well-drilling using plot-level panel data from two states of southern India. The current regime of free (but rationed) electricity is then compared against an annual tax on all functioning borewells that fully defrays electricity costs. The cost-recovery tax, by reining in over-drilling, eliminates a deadweight loss of 170 USD per acre of land with groundwater potential, 30% of the fiscal cost of the subsidy. Further, taxing borewells at a rate 18% higher than annual electricity costs (to address the negative externalities) is socially optimal. The model estimates also suggest a practical compensation scheme to build farmer support for electricity price reform. en
dc.identifierhttp://documents.worldbank.org/curated/en/099508406272329149/IDU057a8b4830c350041140b7e803f7752e1a5de
dc.identifier.doi10.1596/1813-9450-10508
dc.identifier.urihttps://openknowledge.worldbank.org/handle/10986/40020
dc.languageEnglish
dc.language.isoen
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Papers; 10508
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectIRREVERSIBLE INVESTMENT
dc.subjectSTRATEGIC BEHAVIOR
dc.subjectNETWORK GAMES
dc.subjectCOMMON PROPERTY
dc.subjectRESOURCE EXTERNALITIES
dc.subjectENERGY SUBSIDIES
dc.subjectELECTRICITY
dc.titleOver-Drillingen
dc.title.subtitleLocal Externalities and the Social Cost of Electricity Subsidies for Groundwater Pumpingen
dc.typeWorking Paper
dspace.entity.typePublication
okr.crossref.titleOver-Drilling: Local Externalities and the Social Cost of Electricity Subsidies for Groundwater Pumping
okr.date.disclosure2023-07-17
okr.date.lastmodified2023-06-27T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099508406272329149/IDU057a8b4830c350041140b7e803f7752e1a5de
okr.guid099508406272329149
okr.identifier.docmidIDU-57a8b483-c350-4114-b7e8-3f7752e1a5de
okr.identifier.doi10.1596/1813-9450-10508
okr.identifier.doihttp://dx.doi.org/10.1596/1813-9450-10508
okr.identifier.externaldocumentum34103141
okr.identifier.internaldocumentum34103141
okr.identifier.reportWPS10508
okr.import.id1134
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099508406272329149/pdf/IDU057a8b4830c350041140b7e803f7752e1a5de.pdfen
okr.region.countryIndia
okr.topicWater Supply and Sanitation::Water Pricing and Subsidies
okr.topicWater Resources::Water Resources Institutions and Participations
okr.topicWater Resources::Water Policy & Governance
okr.unitDEC-Sustainability & Infrastruct (DECSI)
relation.isAuthorOfPublication460a3e9c-f7d0-5335-977a-578f6fc8ebe3
relation.isAuthorOfPublication.latestForDiscovery460a3e9c-f7d0-5335-977a-578f6fc8ebe3
Files
Original bundle
Now showing 1 - 2 of 2
Thumbnail Image
Name:
IDU057a8b4830c350041140b7e803f7752e1a5de.pdf
Size:
6.22 MB
Format:
Adobe Portable Document Format
Download
No Thumbnail Available
Name:
IDU057a8b4830c350041140b7e803f7752e1a5de.txt
Size:
152.18 KB
Format:
Plain Text
Download
License bundle
Now showing 1 - 1 of 1
No Thumbnail Available
Name:
license.txt
Size:
1.71 KB
Format:
Plain Text
Description:
Download
Collections
Policy Research Working Papers