V. WATER IMPLICATIONS

V. WATER IMPLICATIONS

Solarizing the agricultural power supply may endanger Rajasthan’s groundwater resources by

increasing farmers’ ability to draw water at a near-zero marginal cost. Solar-powered electricity schemes endeavor to supply farmers with a reliable supply of daytime electricity, which will likely bring benefits to agriculture. However, farmers may use newly-generated solar power to pump even more groundwater than they could before. Prior experience with off-grid solar pumps in Rajasthan suggest that farmers respond to increased electricity supply by increasing cropping intensity or growing more water-intensive crops.96 This does not necessarily mean solarization will worsen the groundwater crisis, but it remains a possibility.

Solar-powered irrigation may both (1) cause farmers who already own pumps to draw more water and (2) incentivize farmers without pumps to acquire one. Considering the extreme levels of groundwater overexploitation in Rajasthan, policies should not ignore the risk posed by solarization to groundwater resources.

There is insufficient evidence to rule out the possibility that solarization will exacerbate

groundwater overextraction. The only data to suggest how farmers may respond to the incentives that grid-connected solarization offers are from small pilot studies in other Indian states. These studies have not shown that solarization results in water conservation, and in general have not measured water extraction results adequately. Furthermore, their results may not be relevant for KUSUM implementation in Rajasthan due to differences in scope of interventions, implementation details, and local factors such as agricultural practices and water scarcity.

Absent empirical evidence, predictions of farmer responses to solarization often rely on economic analysis. 97 This ignores that farmers may have non-economic reasons for selling water, such as familial ties or religious or moral values, or that their economic motivations may be difficult to predict. For example, researchers at the World Bank calculate that farmers of most crops grown in Rajasthan would have an economic incentive to sell electricity to the grid if provided with a reasonable FiT. 98 Such analysis doesn’t typically account for the possibility that farmers switch to growing higher value but more water-intensive crops.

Coupling solarization with irrigation efficiency improvements is unlikely to reduce

groundwater extraction. A common misconception is that increasing water efficiency necessarily conserves water; however, examples from across India (and other parts of the world) suggest the opposite is often true. For example, a previous off-grid solar pump scheme in Rajasthan required farmers to own drip irrigation systems to be eligible. Though this was found to increase the productivity of per unit water use, total use did not decrease. 99 Technologies and practices that improve the effectiveness of irrigation application (e.g. by applying water at optimal times and locations in plant root zones) can lead to higher-yielding plants, boosting profitability but not necessarily reducing the overall water application. 100

There is insufficient empirical evidence to judge whether a change from nighttime to daytime

irrigation would affect groundwater extraction. First, daytime irrigation will increase water losses through evapotranspiration, particularly in Rajasthan’s hot, arid climate. As such, daytime is generally considered the worst time to irrigate from a water conservation standpoint.101 Second, the argument that farmers will irrigate less during the daytime relies on the assumption that farmers are currently overirrigating and would be motivated to eliminate that excess by pumping less. Available evidence suggests the opposite may be true—that farmers will apply more water if given the opportunity. This is because the value from increased crop production, or from selling water to neighbors, likely outweighs the costs of pumping water in most cases.102

The FiT mechanism for grid-connected solar pumps in Rajasthan may be too low to prevent over-extraction of groundwater, and the mechanism itself may be too inflexible to achieve

groundwater conservation goals. The best evidence for farmer behavior in response to the FiT comes from the Dhundi cooperative study in Gujarat. Farmers were offered a tariff over ₹7/kWh and in response chose to sell a large proportion of electricity back to the grid. However, the study did not provide evidence that farmers used less water in total. In fact, it seems possible that overall water use actually increased as farmers found it profitable to sell water to their neighbors. 103

Rajasthan’s proposed FiT (₹3.44/kWh) is considerably lower than what was offered in Dhundi. 104 With the FiT too low, participating farmers could choose to grow more water-intensive crops or sell water to their neighbors rather than inject solar generated power to the grid. Such a result would likely exacerbate groundwater overextraction.

Furthermore, the FiT required to incentivize water conservation might vary substantially across regions within the state, and over the course of a PPA term. This is because crop prices vary significantly across different crop types and over time, impacting the opportunity cost of pumping water over the term of the agreement. In contrast, FiTs are more likely to be held stable over long periods, potentially even over the life of the solarization PPA. Even if a fixed FiT is sufficient to conserve water today, it may be insufficient to prevent future water overextraction.

Rajasthan’s groundwater crisis necessitates careful consideration and mitigation of the risks

posed by solarization. Rajasthan’s agriculture relies on groundwater, and Rajasthan’s groundwater supply is among the most depleted in the world.105 Water scarcity already impacts livelihoods and farmers’ welfare.106 The risk of exacerbating these effects cannot be ignored.

GoR should consider legal, regulatory options for pairing solarized irrigation systems with price signals and/or benefit transfers that motivate groundwater conservation. Metering and consumption-based pricing of electricity have long been proposed as a solution to over-extraction and have been implemented in West Bengal and Gujarat, where 85 percent of agricultural connections are now metered.107 These policies can conserve water by eliminating farmers’ access to near-zero marginal cost electricity and increasing the marginal cost of water extraction. A study in northern Gujarat found

that pump owners with metered connections used 30 percent less water per unit of area than owners with flat rate tariff connections.108

Another possible policy is to provide direct benefit tariffs to farmers. In this scheme, farmers are offered a direct payment to conserve electricity. In a recent study in Punjab, farmers were given a fixed amount of free electricity, but were offered a payment of ₹4 per kWh tariff to conserve electricity and thus to limit groundwater extraction. Preliminary results show groundwater savings in the range of 12 to 30 percent.109

GoR could also consider implementing water conservation training for farmers in conjunction with solarization. The Foundation for Ecological Security, an NGO, has had success working with rural communities in southeastern Rajasthan on communal crop selection and groundwater management.110

A “drought premium,” or temporary increase in FiT triggered by draught, can be utilized to

incentivize water conservation for solar pump owners in times of extreme scarcity. This policy could disincentivize farmers from irrigating during particularly critical times and shelter them from the full blow drought would otherwise deal to their incomes.111 However, this mechanism is essentially a temporary adjustment of the FiT, and regulators may thus have difficulty calculating the appropriate rates in a given place or time.

Given unknown and potentially severe risks to Rajasthan’s groundwater, policymakers should prioritize solarization schemes that provide future flexibility to implement concurrent water

conservation policies and regulations. For example, solar feeders could provide more flexibility than solar pumps to implement water metering and pro rata tariffs, since consumers are not also the owners of generation equipment. Direct benefit transfers and farmer training may be equally viable under either scheme, but other policies such as electricity rationing may also be difficult to implement if farmers own their own grid-connected pumps. GoR should ensure its chosen solarization technology does not interfere with its strategy for managing groundwater - whether that strategy is direct benefit transfers, pro rata tariffs, farmer training, or something else.