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Dynamic water reallocation in water-scarce regions in India

A case for regulatory negotiations over markets

Bibliographic Data

ID21697274
AuthorsSachin Warghade (0000-0001-5805-881X, a Tata Institute of Social Sciences, Mumbai, India), Subodh Wagle (0000-0001-6895-639X, b Indian Institute of Technology Bombay, Mumbai, India), Shruthi Ranganathan (0009-0005-9960-801X, a Tata Institute of Social Sciences, Mumbai, India), Yash Sharma (0000-0003-0618-9118, a Tata Institute of Social Sciences, Mumbai, India)
Year2026
Publication date2026-06-12
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueWater Policy (JOURNAL)
Journal identifiersISSN: 1366-7017 • E-ISSN: 1996-9759
PublisherIWA Publishing (PUBLISHER • GB)
DOI10.2166/wp.2026.015
OpenAlexW7167612279
LanguageEN
References cited12

Flowchart showing three cases of water allocation reform in India leading from regulated markets to regulatory negotiation. Case 1 shows diffusion of tradable entitlement system, with 11 of 28 states adopting water entitlements and only 2 accepting tradable water markets. Case 2 shows partial success in individual entitlements and reversal to administrative allocation for non-irrigation use at the cost of irrigation. Case 3 shows successful upstream-downstream reallocation during scarcity through active engagement of contesting regulated entities, leading to the emergence of a hybrid form of regulatory negotiation. India's water allocation framework has undergone successive institutional transitions – from customary rights to administrative control, and more recently, toward market-based reforms. Regulated markets, particularly tradable water entitlements, were proposed to improve allocative efficiency. This study examines the adoption of these reforms across Indian states. While seven states adopted the entitlement system into their legal frameworks, only two enabled trading. In the state of Maharashtra, the most advanced adopter, no trading has occurred. The state continued to rely on administrative allocation, diverting 3,244.7 MCM of irrigation water to non-irrigation use at the cost of 362,592 hectares of irrigation. This exposes the limitations of both administrative and market-based approaches. During severe scarcity, a third mechanism emerged in the form of regulatory negotiations. Reallocation of 2,287.6 MCM of water, as a form of equitable sharing of distress, was achieved not through markets or administrative mechanisms, but through a hybrid form of regulatory negotiations – a combination of stakeholder bargaining, knowledge building, public participation, and regulatory discretion. Unlike conventional negotiation, outcomes were not dependent on consensus but on reasoned regulatory decision-making informed by evolving stakeholder positions. The study argues that regulatory negotiation provides context-sensitive alternatives for water allocation in contested settings

Allocative efficiency · Corporate governance · Negotiation · Regulatory reform · Scarcity · Stakeholder · Conservation, Biodiversity, and Resource Management · Water Governance and Infrastructure · Water resources management and optimization

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