Economic analysis of water use efficiency and its externalities in areca nut cultivation

Groundwater mismanagement in India has resulted in series of issues, including drying up of aquifers, borewell failures, and loss of crop yields and livelihood to farmers. Efforts are being made to develop remedial technologies, and drip irrigation is one such promising technology identified. The economics and efficiency of drip irrigation and compare it with conventional irrigation based on primary data collected from 80 Areca nut growing farmers was studied from the Tumkur district of Karnataka. It was found the net income of drip-irrigated farmers was higher than conventionally irrigated ones. The drip-irrigated farms were economically efficient in groundwater use than the conventional irrigated farms in Areca nut production. Groundwater being a common property resource, externalities play an important role in implementing strategies to save it. Externalities were captured through annual negative externality costs, which were higher by ₹2268 for CIFs.