Abstract:-
This paper studies the intended and unintended consequences of the Preservation of Subsoil Water Acts enacted by Punjab and Haryana in 2009. The Acts sought to conserve groundwater by delaying paddy sowing and transplantation until the arrival of the monsoon. Using district-level panel data and difference-in-differences and triple- differences designs, we estimate effects on agricultural timing, groundwater, irrigation, crop residue burning, and ambient PM2.5. The Acts delayed paddy sowing and harvest by about two weeks and generated groundwater savings, corroborated by reductions in irrigation-machine use. The delayed harvest also compressed the rice-wheat turnaround, increased crop residue burning, and raised PM 2.5 concentrations in Punjab, Haryana, and neighboring states. We then use a dynamic policy framework and back-of-the- envelope welfare calculations to compare groundwater benefits with pollution damages. Avoided-pumping-cost estimates imply groundwater benefits of roughly Rs. 317-592 crore for Punjab and Haryana together. VSL-based pollution damages are about Rs. 22,617 crore, while a conservative earnings-loss benchmark is about Rs. 2,681 crore. The Acts therefore generated meaningful groundwater benefits but substantially larger pollution damages under these valuation benchmarks. The broader lesson is that agricultural environmental policy must be designed across linked margins: crop timing, groundwater use, residue management, and crop choice.

(with- Hisham Ali Ashraf, and Abhijit Banerji)