Today, the Center for Innovative Financial Design (CIFD) has launched the endline survey of its project on contract enforcement in water markets in rural Uttar Pradesh. It will shed additional light on the appropriate interventions to overcome obstacles in irrigation markets in rural India. For that purpose, CIFD has recruited and trained field teams to survey more than 900 households in 22 different villages of Sitapur District over the course of the next 5 weeks. The training comprised different theoretical as well as practical sessions such as using GPS devices, using the survey questionnaires, and data quality management. The questionnaires that have been extensively field tested in the last 10 days cover various aspects related to water trade in rural areas such as pricing, mode of payment, and social relationships between water buyer and seller.
CIFD’s Survey Supervisor Mr. Bipin Gena piloting the Endline Survey questionnaire
Some background info on the research project: often we tend to romanticize about life in rural India, particularly, the social aspects. A common perception is that villagers have lived together for generations and the social interactions they engage in are not marred by conflicts. Such a milieu would facilitate the initiation of informal contracts amongst villagers which unfortunately is not often the case given anecdotal evidence from our field research in the dusty Hindi heartland of rural Uttar Pradesh.
In our preliminary fieldwork on irrigation markets in villages that encompasses the buying and selling of water through engine rental for irrigation of fields, we found that farmers do not undertake additional irrigation that would result in a significant increment in their output.
Pictured above: Survey field team members familiarizing themselves with GPS meters during the survey training
This is due to the paucity of funds to pay for such irrigations before the monsoon when they are most needed. For our randomly created sample water buyer-water seller pairs, we define a water seller as a farmer who owns both an operational bore-well and an operational engine. The matched water buyer in the same village is a farmer without an engine who owns a plot capable of being irrigated with water bought from the seller. GPS devises help to locate all households in the sample.
From today, the survey rolls out
The pertinent question here is why water sellers are not allowing water buyers to pay for irrigation cost or at least a part of it after the harvest when they get lump-sum payments. In return they could charge an extra fee from water buyers for delayed payments. The existence of irrigation credit markets within water buyer-water seller pairs seems to be natural if we consider farmers to be economically motivated.
But this is not the way things are on the ground. One of the reasons could be the difficulty in contract enforcement in rural areas. The experiments we carried out last year aimed to introduce variation in enforcement institutions for farmers and look at effects on bargaining over water sales. By providing subsidies in some cases to the buyers and in other instances to the sellers, we intended to observe a difference in irrigation transactions between these two groups if at all there are enforcement constraints in water markets.
Stand by for our findings when we complete the endline survey by July 2010.
Sanchit Kumar, Project Manager at CIFD, contributed this post.