The Review of Agricultural Economics Competitiveness of Groundwater Market in Privatized Shallow and Deep Tubewells for Diversified Irrigation: An Assessment

In recent years, the privatization and trade liberaIization of irrigation policy has increased the nwnber of tubewells (TWs) and the irrigated area in Bangladesh agriculture. But the area irrigated per unit of equipment has dramatically decreased, particularly in regard to deep tubewells (DTWs). The installation of new shallow tubewells (STWs) around the DTWs is the primary cause of this decline in DTW use. A remarkable amount of.Jand has been irrigated for vegetable cultivation using the cheaper and less durable STWs, thus undermining the cost-effectiveness of DTW use in diversified irrigated regions and affecting the incentives of both DTW and STW owners. The monopolized water markets of DTW have responded to the competition from water markets that use STW by increasing their own command area. In this paper, an analytical framework is developed to help clarify the competition between STW and DTW in groundwater market and its effect on the economic viability of TW operation as a private business. Empirical evidence is provided by a case study conducted on a diversified crop irrigated region comprising 3 DTWs and 7 STWs. The results show that, although the prevailing groundwater market has a com-petitive structure, the STW enjoys more profit in the short run than the DTW.