Virtual Water, Real Consequences

In today's newsletter we talk about the looming water crisis in India and the government's new scheme to address these problems

The Story

Climate change is real. Weather patterns are changing. India is at the thick of it all. And now we are hearing that lack of adequate rainfall is probably going to add to the acute water shortage plaguing this country. With a water crisis this large, you would think exporting this important commodity would be out of the question, right? But that is exactly what India is doing. At least indirectly.

You see, India is one of the world’s largest exporters of Virtual Water. This means while we don’t explicitly export water, we do it by selling other commodities that use water. Crops, textiles, livestock and machinery all need water and every time we ship these items abroad, we are sending away many gallons of water along with it. In fact, we export 95400 million litres on average every year. For context, that is 38000 times more than the amount of water used in an Olympic sized swimming pool.

India’s largest exports are rice, cotton, sugar and beef- all of which are the water-intensive kind. But basic trade theory dictates that a country should only be exporting things when there’s a surplus available. As we already noted however, groundwater doesn’t fit that bill. So why this discrepancy?

Well, agriculture. More than 80% of our water is spent on farming. And there are some big inefficiencies here. For instance, Punjab has a strong irrigation infrastructure, a procurement policy that assures farmers that their crop will have always buyers, HYV (High Yielding Variety) seeds and subsidized power. These added incentives have made paddy farming highly profitable. However, it creates other distortions. For example, while HYV seeds offer better yields than their conventional counterparts, they guzzle a lot more water. But since power is subsidized and therefore always available at a low cost, farmers resort to indiscriminate groundwater extraction anyway.  On the other hand, West Bengal and Bihar, which get a lot more rainfall and are actually in a better position to grow paddy, but don’t have these incentives.

If that’s not bad enough, Paddy and Sugarcane together constitute 25% of gross cropped area in India, but they utilize over 60% of irrigation water. Now we are not saying that we have to abandon paddy and sugarcane altogether. On the contrary, what we are saying is perhaps we need to find a better balance. If there was some way the central and state Government could disincentivise farming of water-guzzling crops in low rainfall regions and instead encourage the cultivation of such crops in areas we receive plenty of rainfall maybe we wouldn’t have to struggle so much.

And it seems like the Government has finally woken up to the grim reality of the impending water crisis. Last week, they launched the Atal Bhujal Yojana, which will be implemented in seven states over five years. The focus of this Panchayat-led scheme will be to stop the rapid decline of groundwater and focus on building less wasteful agricultural practices. They seek to do this by bringing behavioural changes at the community level for sustainable water management. The project has a hefty budget of Rs 6,000 crores, and they also have incentive programs where districts that perform better will be offered more funds as time goes by.

All said and done, this scheme might help with groundwater depletion but it isn't a full-fledged solution by any stretch of the imagination. Hopefully, this is only the beginning and we don’t have to worry about water for our children.

Also if you have found finshots useful, please do consider telling your friends about this. All you have to do is Whatsapp or Tweet this story.