UC Riverside

This dissertation comprises three studies on Pakistan in which I examine the allocative efficiency of groundwater across farm-level constraints; the optimal management of groundwater given differences in agricultural tenure; and the effect of a set of policies on the utilization of groundwater. In the first chapter, I estimate the allocative inefficiency of groundwater in Pakistani agriculture using a panel dataset of rural households and show that the utilization of groundwater varies across a set of farm-level constraints (tenure, farm size, access to surface water and location on a watercourse). In the second chapter, I examine the long-run trend of groundwater depletion in Pakistan’s Indus Water Basin under common-pool resource management—the status quo—and under optimal management. I develop a dynamic optimization problem to illustrate long-run steady states of groundwater pumping under different management, hydrologic, economic and tenure assumptions. The analysis shows that the benefits of optimal management exceed the benefits of common property management, and that the small share of sharecropping does not have an important effect on the results. In the third chapter, I use a panel dataset of rural households—the same dataset used in the analysis in the first chapter—to examine the effects of two water policies—increasing access to surface water and increasing the reliability of the supply of surface water (as measured by being located higher up on a watercourse)—on the allocative efficiency of groundwater and land productivity. The results show that farms allocate groundwater more efficiently (over utilization decreases) as the share of total farm area with access to surface water increases while increasing the reliability of surface water supply does not appear to improve the utilization of groundwater. Increasing the share of total area with access to surface water has a modest effect on land productivity. My research emphasizes the relationship between groundwater conservation and the institutional environment of farms in Pakistan’s agricultural sector, and helps to inform the larger discussion on the effective governance of water resources in the region.