Water Rights Imperative in Sustainable Water Management

By: R Maria Saleth
Water scarcity in India cannot be tackled without establishing binding water withdrawal limits through a system of enforceable water rights at various scales.
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The persistent and widespread symptoms of an imminent water crisis across India are a clear evidence of the failure of our water-related policies and institutions. It is urgent to seek for more durable, but politically harder and technically challenging options such as the institution of a water rights system. Why do we need a water rights system in the first place? What is the status of the issue of water rights in current policy? What are the legal, economic and physical characters and requirements that a water rights structure should satisfy? Do we have enough institutional and technical potential for instituting a water rights system? This article attempts to shed lights on these and related questions.

Why do we need a water rights system?

While legal reforms are needed in all spheres of the environment and natural resources, water reform is particularly urgent in view of the special role that water plays in human survival and progress (Singh, 1991). Water not only caps the absolute needs of human beings (and also of animals, plants, etc.) but also forms the basic input for producing other basic needs such as food and fish products as well as other needs such as power generation and navigation. Since existing water-related laws, policies and organizations are unable to tackle current and future challenges of the water sector, there is a need for creating a new water institution rooted in a system of water rights.

With an efficient and transferable water rights system, markets for water will emerge to guide water allocation and use at the individual, sectoral, and regional levels. Since the water rights system can be designed to establish withdrawal/use limits at the individual level, to address distributional needs of within and across groups and regions and to confirm with the overall sustainability limits, it is a rare policy instrument that can simultaneously advance three social goals, i.e., economic efficiency, social equity and resource sustainability.

Water rights issue in policy and literature

Although most colonial and post-colonial laws have ascertained the absolute rights of the state over water and other natural resources, policy-makers have, time and again, underlined the need for something resembling a water rights system (Government of India, 1976 and 1992). For instance, the National Commission on Agriculture (1976) has proposed to allocate groundwater rights in proportion to land ownership. The Model Groundwater (Control and Regulation) Bill 1992 has postulated a kind of water permit system. Similarly, the National Water Policy of 1987 and that of 2002 have recognized the need to establish some upper limit on individual water withdrawals. While the economic and equity significance of water rights system is clear, it is still considered by many as an administrative nightmare and a political impossibility. Fortunately, this perception is steadily changing because the opportunity costs (i.e., the foregone socio-economic benefits) of status quo are exceeding fast the political/administrative costs of instituting the system. Besides, with technological progress and development of institutional and technical capacities, the costs of transacting the reforms are also on a constant decline.

Water rights system: technical and institutional requirements

At the outset, it is necessary to dispel the commonly held view that the fugitive character of water is an insurmountable obstacle for defining water rights. Complete physical control over an object is not at all necessary for establishing an ownership system for ownership to an asset implies only a bundle of circumscribed user rights. That is, it is rights, not objects, which are owned (Coase, 1960; Dales, 1968). Property rights over water, once established, can yield tremendous net social benefits. The full realization of such benefits depends on the technical and institutional potentials and capabilities, which are critical to establish, enforce and administer the water rights system in the field.

The most immediate requirement for a water rights system is to establish water balance, i.e., the demand for and supply of water for each appropriately defined hydro-geological unit. To enhance decision-making under uncertainties, water balances have to be established under a variety of alternative climatic/technical conditions, disaggregated by users and sources. Given an uneven regional distribution of water demand and supply, it is also necessary to form ‘water grids’ that could provide a framework to promote inter-basin water transfers.

As to the modus operandi of water rights systems, three issues qualify for immediate attention: (a) unit of measurement, (b) criteria for rights distribution and (c) enforcement and monitoring mechanisms.

(a) Volumetric measure: An ideal unit of measurement will be independent of both time and space. This demands a volumetric rather than a flow-based measure. This has been suggested long before by the 1972 National Irrigation Commission and also endorsed by the 1976 National Commission on Agriculture (Government of India, 1976). It is the volumetric measure that could provide the much-needed economic incentive for maximizing output per unit of water, instead of the usual practice of maximizing water per unit of output. The Model Bill of 1992 has suggested the mandatory installation of water meters for all users (Government of India, 1992).

(b) Criteria for rights distribution: As per Coase Theorem, as long as water rights are transferable or rentable, economic efficiency is independent of the criteria used in the distribution of initial water rights. However, from an equity or income distribution perspective, the choice of criteria is important because water rights assignment amounts to an asset transfer. While one can think of a variety of approaches including a bidding procedure, for rights allocation, one can consider two familiar criteria: one proportionate to land ownership, as suggested by the 1976 National Commission on Agriculture (Government of India, 1976: 45) and the other proportionate to family size, irrespective of land ownership as adopted actually in the Pani Panchayat system (Thakur and Pattnaik, 2002). It is also possible to follow a hybrid model wherein certain amount of water, which is reserved for landless persons, is apportioned in accordance with the Pani Panchayat model and the remaining is distributed among landowners in proportion to land ownership.

(c) Enforcement and monitoring mechanisms: To begin with, the government, as a grand trustee of water resources, owns the resource and also has the responsibility to establish the overall legal, policy, and organizational framework for an equitable water rights system. The usufructuary rights vest with individual users. However, the enforcement and administration of the rights system established thus should be left to local trustees who can be either Panchayats or other village-level or outlet-level user groups. Such a decentralized arrangement will be the effective means of enlisting people’s participation in water management as the water rights system would have created a stake for their direct involvement. Despite their weakness, the local governance organs and the existing water/irrigation cooperatives and outlet-level user associations do indicate the existence of a fair amount of institutional potential at the grassroots level that could be tapped to develop effective and flexible mechanisms for the administration and enforcement of the water rights system.

Hierarchical and dovetailed framework of water rights

The ‘public trust’ framework noted above has both a hierarchical structure, where the use and regulatory rights of the users, communities, and state are organically linked as well as dovetailed structure, where the allocation and use rights of individuals, sectors, and regions are operationally linked. Such a framework, besides being an institutional synthesis of centralized and decentralized decision-making mechanisms, has also other desirable integration properties.

While the right of the state or community is essentially a legal one related more to its duties in establishing, enforcing and monitoring water allocation and use, the individuals’ use rights are not only legal, but also physical in nature in the sense that these user rights specify a fixed quantity of water along with legal duties involved in its utilisation. Thus, the hierarchically structured water rights system could ensure internal legal consistency and also satisfy the basic economic requirement.

By assuming a decentralized decision-making structure that is endowed with sufficient economic and technical information, it is possible to visualize the following dovetailed structure of water rights. First, the quantity of water and its priority for different sectors are established at a given geographical and decision-making context (e.g., river basin and village) preferably on an annual basis to enable periodic revision. Second, within the sectoral allocation pattern established above, water quantity and its priority for uses within each sector are established. And, finally, having sorted the water allocation across communities, the amount of water available to each individual member (i.e., individual water rights) of the community is determined based on the distribution criteria. If the legal framework of the water rights system is designed within this dovetailed context, then it is easy to achieve internal physical consistency among the water rights of various sectors and uses.


The economic rationality and urgency for a water institution based on a water rights system are vivid and obvious. Water rights system is indeed a critical institutional requirement for sustainable development for it is one of those rare policy instruments that can simultaneously address three critical goals of sustainable development. These are ecological security, economic efficiency, and social equity. The desirable practices like conjunctive use, supplemental irrigation, water-saving technologies, water transfers and water recycling cannot all happen in an economic vacuum. A Strong economic incentive could emerge only when users perceive water as a constraint which, in turn, can happen only with quantified water rights.

The existence of various forms of incipient systems of rudimentary water rights in different parts of the country and the ability and maturity of our farmers to manage water allocation by themselves, as revealed by the spontaneous emergence of groundwater markets and the growth of farmer-managed irrigation systems, do indicate that farmers and individuals could very well adapt themselves to the institution of water rights. It is time, therefore, not to enumerate the administrative difficulties, technical snags or political problems, but to identify ways and means by which these problems could be managed to make an efficient and practical water rights system as one of the indispensable institutions for promoting sustainable water management in India.


Coase, R. H., 1960, The Problem of Social Cost, Journal of Law and Economics, 3(1): 1-44.

Dales, J. H., 1968, Land, Water, and Ownership, Canadian Journal of Agricultural Economics, 1(4): 791-804.

Government of India (GOI), 1976, Report of the National Commission on Agriculture. Part V: Resource Development, Ministry of Agriculture, New Delhi.

Government of India (GOI), 1992, Model Bill to Regulate and Control the Development of Groundwater, Ministry of Water Resources, New Delhi.

Singh, C., 1991, Water Rights and Principles of Water Resources Management, N.M. Tripathi Private Ltd, Bombay.

Thakur, K.M., and Pattnaik, B. K., 2002, How Effective are ‘Pani Panchayats’?: A Field View from Maharashtra, Sociological Bulletin,
51(2): 241-268.

The author is Honorary Professor, Madras School of Economics, Chennai. r.saleth@gmail.com


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