Conservation credits: Payments for voluntary groundwater conservation

Policy brief Firms and Farms

  • Paying farmers to pump less groundwater could be a cost-effective and equitable way to reduce water and electricity consumption in irrigated agriculture.
  • A pilot of conservation credits among 90 smallholder farmers in three villages in Gujarat proceeded smoothly and was received well by the communities.
  • Results suggest that financial incentives may be able to substantially reduce groundwater pumping — but the range of uncertainty is large.
  • A larger evaluation could reliably measure the cost-effectiveness of conservation payments