Fortnightly Seminar Series

“Decentralization and Spatial (Mis-)Allocation of Irrigation Water: Evidence from India” 

Speaker: Dr. Sabyasachi Das

Abstract: This paper examines, both theoretically and empirically, the importance of decentralization in the management of canal irrigation in improving spatial allocation of water and consequently, agricultural performance. Under centralized provision, farmers closer to the canal extract larger amounts of water, generating inefficiency. Decentralization improves audit capacity of (local) government and consequently, farmers farther away from canal are more likely to get water. We empirically validate the predictions by exploiting the staggered constitution of locally elected canal management bodies (“Pani Panchayats”) in the state of Orissa, India. Using survey data and a difference-in-difference strategy, we show that farming plots farther away from canal receive less water, but greater exposure to decentralization significantly reduces mis-allocation. Consequently, agricultural output, revenue and wealth (land-holding) improve more for those farmers. We find that distant farmers’ ability to complain to local representatives and representative’s ability to invest in local canal infrastructure are two mechanisms that can explain the results.