Water vending is a booming business

By Dr Sudhirendar Sharma

Farmers in Goa and Tamil Nadu are abandoning their farms for the more lucrative business of extracting and selling groundwater. The groundwater trade is close to Rs 30 billion today, with 50% of the urban and industrial demand met through groundwater. And yet, there are no regulations to prevent this dangerous over-exploitation of groundwater resources

Villagers all along the coastal and mid-ridge zone of Goa have found an ingenious way of ensuring livelihood security, not from better crop harvests but from trading water from their private wells. While the exact number of those selling water is not known, the trend is well-established across this popular travel destination.

Though Goa enacted its Ground Water Regulation Act in 2002, delay in framing the rules has allowed people like the Kudnekar brothers to sell water from their private well in village Saligao. Once a popular hippy haunt, Saligao is now home to a raging controversy over the water trade which has got the entire village up in arms against the duo.

Says geologist A G Chachadi of Goa University, "Overdraft from shallow sandy acquifers has impacted the groundwater level." Ignoring the problem of a declining water table in the village, tankers continue to extract about 435 cubic metres of water from the Kudnekars' well every day. Ironically, the Kudnekar brothers have been selling the precious community resource to the resource-hungry tourism industry for just 10 paise a litre.

Farmers around Tirupur town in Tamil Nadu -- where a lucrative hosiery industry thrives -- have long forgotten the art of crop cultivation. For them, selling water from their private wells is what constitutes a good harvest. With lucrative margins, farmers are pursuing their newfound vocation with gusto.

Trade in well water isn't unprecedented, however. Tankers carrying door-to-door potable water supply are common in most metropolitan cities including Delhi, Chennai and Bangalore, where water tankers supplement the shortfall in municipal supply. Most of that water is ferried from wells in the nearby villages. The contractors pay a pittance to the well owners.

The World Bank has long argued that water-vending has the potential to reform the monopolistic water sector by bringing in much-desired competition. Indeed, many World Bank-financed projects in Colombia, Paraguay and Senegal have supported small-scale water entrepreneurs in the context of the inefficient State-managed water utilities.

In Chennai, water-vending through tankers meets 5 per cent of the total water needs. Private water-vending in Dhaka is flourishing thanks to inadequate municipal services. In both cases, the World Bank has argued that suitable regulatory mechanisms could promote optimum use of water resources as well as support private enterprise.

While the aid agencies promote water-vending and privatisation, government's apathy in setting up stringent groundwater regulations leaves a convenient loophole for entrepreneurs. Though legally there are no de jure rights to groundwater, de facto all landowners literally own the groundwater under their land.

Over-exploitation of groundwater has been limited to agriculture until now, but the emerging commercial dimension is laying additional stress on the already dwindling groundwater reserves in the country. According to the Central Groundwater Board, there are over 150 'dark' blocks where the level of groundwater exploitation exceeds 85 per cent and this number is multiplying threefold every decade.

The `dark zones' will certainly multiply if the growing dependence on groundwater resources for municipal and industrial consumption continues to grow at the present pace. Currently, around 50 per cent of the total urban and industrial demand is met through groundwater. An assessment by the National Institute of Urban Affairs found that 21 per cent of the urban water demand was met through wells.

Despite this over-exploitation of groundwater, urban water supply falls short of the rising demand. Unrestricted access and lack of regulatory policies are encouraging trade in groundwater. From an estimated Rs 3 billion a year, the groundwater trade is today close to Rs 30 billion. What was earlier the bastion of farmers and small-time water vendors is now attracting investors and municipal water authorities as well.

Thanks to the World Bank-triggered water sector reform process, trade in water has now been legitimised to such an extent that water utilities in the public domain are switching to profit-making water supply systems. Absolving itself of the primary duty of servicing the poor, the Delhi Jal Board (DJB) is toying with the idea of selling water through water booths. Once operational, civic bodies in other cities will follow suit.

DJB's daily supply of about 650 million gallons (mgd) doesn't cover 1,600 unauthorised colonies and 1,100 slums. Instead of laying pipelines to reach this large segment of the urban population, the DJB wants them to queue up in front of the water booths to purchase their daily requirement of water. Expectedly, water supply to the booths would be ensured through tankers.

Where the DJB will procure the additional 250 mgd of water to reach out to the unreached is anybody's guess. However, it is clear that groundwater will constitute the bulk of the supply, giving institutional cover to the unorganised trade in groundwater. Concern for the poor notwithstanding, the Kudnekars are sure to thrive in the emerging water trade. The signs are ominous!

Dark zones: The ominous effects of over-exploiting groundwater

The importance of groundwater in the Indian economy can hardly be over-emphasised. Despite an extensive irrigation infrastructure, some 60 per cent of all irrigated foodgrain production still depends on groundwater wells. In drought years, groundwater is the predominant source of irrigation. No wonder then that over-exploitation of groundwater has become a serious problem in a few states.

Against a critical level of 80 per cent, the level of exploitation is over 98 per cent in Punjab and about 81 per cent in Haryana. According to the Central Groundwater Board, the problem is also becoming increasingly serious in Tamil Nadu and Rajasthan. The blocks where groundwater exploitation exceeds 85 per cent are termed `dark'. In Punjab, 62 per cent of the blocks are `dark'; in Haryana, 33 %; in Rajasthan, 29 %; in Gujarat, 25 % and in Tamil Nadu, 26 %.

The 1970s saw major strides in groundwater development in Punjab by farmers, and the rapid expansion of minor irrigation led to over-exploitation of groundwater in many parts of the state, viz Kapurthala, Jalandhar, Sangrur, Patiala, Ludhiana and Amritsar districts. In Haryana, while groundwater transformed traditional cultivation into commercial cultivation, the average depth of the water table is estimated to have fallen between 1 to 33 cm annually in different parts of the state during the 1980s.

In North Gujarat, bullock-bailers could lift groundwater for irrigation barely 30 years ago because water levels in wells were 10-15 metres; but today, tubewells must reach depths of 400-500 metres to get economic discharge. The 35-75 hp pumps needed to lift water from such depths cost so much that farmers in the region have set up tubewell companies to share the costs and the risks of these irrigation investments.

Groundwater is being extracted for commercial purposes too, adding to a serious groundwater depletion across the country. Large cities like Ahmedabad, Jodhpur and Chennai support thriving private groundwater businesses that draw water from tubewells in the neighbouring hinterlands for supplies to high-income residential areas because groundwater tables in the cities are falling at a rate of 7-10 feet per year. Owing to lack of stringent groundwater laws, groundwater is bundled with land ownership -- leading to uncontrolled exploitation.

Ironically, at the heart of all these problems are the unique advantages that groundwater has and the opportunity it offers for human development. Groundwater is accessible to a large number of users; it can provide cheap, convenient, individual supplies; it is generally less capital-intensive to develop, and does not depend upon mega water projects. Compared to surface water, which is flashy in nature, groundwater offers better insurance against drought. Also, evidence suggests that crop yield/metre cube on groundwater-irrigated farms tends to be 1.2 to 3 times higher than on surface-water-irrigated-farms. Cost of irrigation alone seems to be the deciding factor.

Some 1,150 cubic kilometres of rainwater precipitation still runs off to the seas annually in the form of `rejected recharge', according to the Indian National Committee on Irrigation and Drainage (INCID). If a fraction of this could be stored underground by reducing the velocity of the runoff and providing time for recharge, groundwater supplies could be enhanced significantly. There is therefore enormous room for institutional and technological innovations than can put groundwater irrigation at the service of the poor.

(Dr Sudhirendar Sharma is a water expert and development analyst attached to the New Delhi-based Ecological Foundation. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.)

InfoChange News & Features, February 2003