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dam-l LS: The Narmada Damned? Economic Times Editorial, July 10

The Economic Times Editorial, July 10, 1999.

The Narmada damned?

Politics are the public actions of free people. The
celebrated author Arundhati Roy's spectacular entry into free politics
is, therefore, good for India, since politics has hitherto
largely been  confined to soldiers of centralised, hierarchical political
parties. The question is: Is she right to oppose the Narmada dam?
What does Economics say?

             First, that if a resource is commonly owned, it is
destroyed. Water is a resource that should be governed by property
rights,  including riparian rights over river water. These rights
should be capable of being freely sold. Then, there will be a market
for water, in much the same manner that there is a market for gasoline.
Because of the market working, gasoline is always available; there is no
scarcity.

             Because the market for water does not work, water is scarce -
 although 70 per cent of the earth consists of water.
Centrally planned big dams in India do not price water and fail to
utilise the resource effectively. Thus, while there is nothing wrong
with big dams per se; there is something wrong with centralised
state planning and execution of these projects. We need to move
over to a property rights regime for water resources.

             This will involve a new role for the state. The point can
be illustrated by taking an example from ground water.
Property rights to ground water can be shared between various
 landowners. If this is not done, there will ensue a race to
the bottom as each draws as much water as possible fearing
that,  even if he restrained himself, his neighbour would draw out
the  water. Using modern technology, both ground and riparian
water use can be measured, and sold to a higher bidder.

             In his critique of Roy, B G Verghese said that she drinks
water in Delhi that comes from the Bhakra Dam. But if water is
scarce in Delhi even as farmers in Punjab are growing rice which
requires 21 waterings it is only because this water is not priced.
With property rights, water would be priced and used
accordingly. A Punjab farmer may find it profitable to sell his water
rights to a firm that pipes water in Delhi. The basic failure of
planning lay in  ignoring prices and distorting resource use patterns. This
can be reversed by shifting the paradigm. The enemy here is the planner;
not the dam.