Scope of the Presentation

Transcription

1 Can Electricity pricing be a tl fr efficient, equitable & sustainable use f grundwater in Indian agriculture? M. Dinesh Kumar Institute fr Resurce Analysis and Plicy (IRAP) dinesh@irapindia.rg Presented at the Internatinal Cnference Twards Sustainable Grundwater in Agriculture: Linking Science with Plicy San Francisc, Califrnia, USA June, 2010 Scpe f the Presentatin Mdes f electricity supply & pricing t agriculture in the past & present: bjectives & utcmes Certain myths abut metering & cnsumptin based electricity tariff Objectives, apprach & methds used in 3-lcatin study Impacts f pr-rata pricing f electricity in farm sectr Technlgical innvatin fr metering electricity use Metering & restricting energy supply fr grundwater pumping: scenaris & utcmes Cnclusins 1

2 Past Mdes f Pricing Electricity in Farm Sectr: Objectives & Outcmes Flat rate pricing was intrduced t maximize welfare benefits; and reduce transactin csts f metering It creates incentive t use grundwater excessively Increase the mnply pwer f large well wners; and des nt reduce the selling price f water Increased inequity in distributin f subsidy benefits Lack f infrmatin abut actual pwer thefts; transmissin lsses Reduced the sustainability f grundwater use Annual revenue lss f 7 billin dllars Even after ratining f pwer supply hurs, energy use desn t drp Why Metering? Farm level electricity metering generates infrmatin abut the use f bth energy and grundwater Farm level metering helps: q Detect electricity theft by individual farmers q Assess the actual energy requirements in farming different seasns; and q Assess technical lsses separately Therefre, it is the first step twards managing bth grundwater & energy ecnmy 2

3 Myths abut metering & pr rata pricing f electricity in farm sectr That metering invlves huge transactin csts That it reduces scial welfare benefits Meters wuld be easily tampered with, and theft wuld increase, whereas the same wuld nt happen with flat rates Farmers acrss classes resist metering With technlgical innvatins, this can be drastically reduced It is the ther way rund; it increases the efficiency; imprves welfare benefits, with pr rata charges Tendency wuld be mre with flat rate, as the supply will have t be restricted Only large farmers are against metering Study Lcatins Nrth Gujarat Electricity supply under flat rate and pr rata Eastern UP Electricity supply under flat rate & diesel pump Suth Bihar Plains Electricity supply under flat rate & diesel pump 3

4 Apprach and methdlgy Farmers wh are using diesel wells fr irrigatin and water buyers are used as prxy cases fr pr-rata tariff Impact f change in mde f pricing n ecnmic viability f farming is examined by cmparing the verall water prductivity f the farming system, an indicatr f the efficiency f bth electricity & grundwater use, f electric well wners and water buyers f electric & diesel cmmands Sustainability impacts is analyzed by lking at the differences in water withdrawal per unit irrigated area Equity impact is analyzed by cmparing the charges paid by the water buyers under these regimes against the cst (Rs/m 3 ) farmers have t incur fr access grundwater if he wuld decides t have his wn well Methds Physical prductivity f water fr a given crp (kg/m 3 ) is estimated by using the data n crp yield and the estimated vlume f water applied Water prductivity in ecnmic terms (Rs/m 3 ) is estimated by using net returns frm crp prductin (Rs/ha) and estimated vlume f water (m 3 ) used per unit area Physical prductivity f water in milk prductin fr livestck WP milk (litres/m 3 ) is estimated as: WP Milk = Q MP / milk milk is the ttal vlume f water used per animal per day, including the water embedded in feed and fdder inputs, used in dairying fr an animal in a day, wrked ut fr the entire animal life cycle (m 3 /animal/day). It is estimated as: milk = (Q cf /WP cf ) + (Q df /WP df ) + (Q cf /WP df ) + DW 4

5 Methds Net water prductivity in dairying WP Milk (Rs/m 3 ) estimated as: WP Dairy = NR Milk / milk Water prductivity f the farm WP farm (Rs/m 3 ) is estimated as: WP m WP i= 1 V + crpi crp, i i= 1 j= 1 farm = m n V crp, i + n j= 1 WP V dairy dairy, j dairy, j Here, WP crp, i is water prductivity f main prduct f crp i; V crp, i is ttal vlume f water used fr crp i; WP dairy, j is the water prductivity in dairying fr livestck categry j; V dairy, j is the vlume f water used fr dairy prductin per animal fr livestck categry j; and N j is the ttal number f livestck in that categry V N j N j Cst f grundwater irrigatin 5

6 Efficiency impacts f pr-rata pricing Cnsumptin based pricing creates incentives amng farmers t btain higher return frm every unit f water When cnfrnted with marginal cst, and under higher tariff, farmers use electricity & water mre efficiently; select crps and farming systems that are mre water-efficient Higher pr rata tariff des nt lead t reduced incme frm crp prductin as farmers use water & ther inputs judiciusly They btain higher returns frm every unit f land als Sustainability and equity impacts f pr rata pricing Farmers use less amunt f grundwater per unit f land; imprving sustainability f grundwater use Returns frm farming are inelastic t tariff; but elastic t cntrl ver irrigatin water The mnply pwer f well wners is higher under flat rate pricing Pr rata pricing will have n adverse effects n access equity in grundwater; mnply pwer f the sellers is driven mre by ther cnsideratins (transferability f water; and difficulty in btaining pwer cnnectins) 6

7 Pre paid meters: technlgical innvatins fr intrducing pricing refrms It prevent electricity pilferage thrugh manipulatin f pump capacity Can be perated thrugh tkens; scratch cards, magnetic cards r recharged digitally thrugh internet & SMS. It helps electricity cmpany restrict the use f electricity The cmpany can decide n the "energy quta" fr each farmer n the basis f either: n n Reprted cnnected lad, and ttal hurs f pwer supply Sustainable abstractin levels per unit f irrigated land Database fr every agricultural cnsumer f the cnnected lad, lcatin etc. is required Farmers pay & btain activatin cde thrugh mbile SMS Mbile activatin cde Surce: Slim Zekri,

8 Different mdes f pricing & expected utcmes under different energy supply regimes Energy supply ptins Metering ptins Energy Pricing plicy ptins Impacts n energy/ water efficiency & agriculture Energy ecnmy, grundwater Fixing energy quta f each farmer n sustainability criteria Use is metered 1..Pr rata tariff Imprved efficiency f energy/ water use; higher Crp water prductivity Theft prevented; revenue lss reduced; grundwater use is sustainable Fixing energy quta based n cnnected lad & supply hurs Use is metered 2..Pr rata tariff 3. HP based tariff Imprved efficiency f energy/water use by all Imprved efficiency f energy/water use by large farmers Theft prevented; revenue lss reduced Theft & revenue lss reduced\ Inequitable distributin f Subsidy benefits Unrestricted energy Supply Use is metered 4..Pr rata tariff Imprved use efficiency + High prductivity gains frm better reliability N lsses t the SEB; But, grundwater use may nt be sustainable Fixing supply hurs Use is nt metered 5. HP based tariff Pr energy use efficiency; mnply f large farmers Theft high; revenue lsses t the cmpany unsustainable grundwater use Cnclusins Studies shw metering & pr rata pricing f electricity imprves efficiency, equity and sustainable f grundwater use in agriculture It is als sci-ecnmically viable; rientatin f farmer rganizatins and pliticians is crucial t get wider acceptance f ideas Optin 3 is easily implementable t manage energy ecnmy; Optin 2 is lightly difficult, but wuld cnserve grundwater als; Optin 1 is best fr c-management f grundwater and electricity; but needs plitical will Gvernment can ffer subsidies fr meters if farmers are willing t g fr Optin 1 and 2 SEBs t setup cmputerized database f all agr wells, cmprising their latitude & lngitude, physical characteristics and land use data 8

9 Increasing Electricity Use & Grundwater Withdrawal Under Jytigram 9

10 Farming System Level Water Prductivity (Rs/m 3 ) under Different Pricing Regimes Name f t h e Regins Name f the district Electric Well Cmmand Flat Rate Unit Pricing Diesel Well Cmmand Well wner Water buyers N r t h Gujarat Banaskantha NA NA Well Owner Water Buyer Well Owner Water Buyer Eastern UP Varanasi and Mirzapur S u t h B i h a r P l a i n s P a t n a Irrigatin water use and crp water prductivity Name f the Crps Depth f irrigatin water (cm) Electric Pump Owner Water prductivity (Kg/ m 3 ) Main By-prduct Prduct Net water prductivity (Rs/m 3 ) Electric pump water buyer Water prductivity (Kg/m 3 ) Main Byprduct Prduct Depth f irrigatin water (cm) Net water prducti vity (Rs/ m 3 ) Kharif Seasn 1. Paddy Vegetable Lady s Finger Maize Sesame Sugarcane Pearl millet Black gram Grundnut Green gram Rabi Seasn 1. Wheat Ptat Pea Barseem Gram Mustard Linseed Barley

11 Net incme frm crp & milk prductin: three lcatins Name f the Regins Type f Well Cmmand Type f farmer Grss crpped area (Ha) Net incme frm crps (Rs) Net incme frm dairying (Rs/day) Ttal farm level incme (Rs) Farm level net incme (Rs/Ha) Eastern UP Nrth Gujarat Electric Well wner Water buyer Diesel Well wner Water buyer Electric Flat Rate Metered Suth Bihar Plains Electric Well wner Water buyer Diesel Well wner Water buyer Impact f pr-rata pricing n grundwater use Name f t h e Regins Name f the d i s t r i c t Grundwater Pumpage by Electric Pump Owners Grundwater Pumpage by Diesel pump Unit Pricing Flat Rate Well wner Water buyers N r t h Gujarat Banaskantha NA NA Grundwater Use in Electric Well Cmmand by Grundwater Use in Diesel Well Cmmand by Well Owner Water Buyer Well Owners Water Buyers Eastern UP Varanasi & Mirzapur S u t h B i h a r P a t n a

12 Mnply pwer f well wners under different tariff regimes Name f t h e Regins Name f the district Selling Price f Water and Mnply Price Rati in Electric Well Cmmand Selling Price MPR Diesel Well Cmmand Selling Price MPR Nrth Gujarat Eastern UP Suth Bihar Plains Banaskantha Varanasi and Mirzapur Patna