Water allocation between states in inter-basin water transfer in India
2011
Bhaduri, Anik | Barbier, Edward B.
In the following paper, we illustrate the proposed inter-basin water transfer in India and attempt to do an ex ante analysis of the sharing of the transferred water between the donor and the recipient states. The paper identifies that one of the possible ways of water allocation between the states could be market based. Our results also indicate that such price-based water transfer could lead to an inefficient outcome. The donor states could charge a much higher price and the buyer would buy lesser amount of water than optimal. We also investigate water allocation in a situation where a state cares about the welfare of the other states, and the political relations between the states are crucial elements influencing such altruistic concerns. We recognize the risk of hostile political relationship between the donor and the recipient state, which can affect the welfare of the latter states. We consider different scenarios of political relationship and the corresponding altruistic concerns under which the upstream states would allocate water after the river-linking project takes place. The case of water allocation between Orissa, Andhra Pradesh and Tamil Nadu is illustrated in the paper.
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