Abstract

Environmental policies often have unintended consequences. We investigate the unintended effect of a groundwater conservation policy on air pollution in Haryana and Punjab, major rice-producing states in North India. Rice is a Kharif crop typically sown during early May and harvested post monsoons around October-November. Water-intensive pre-monsoon rice cultivation leads to significant groundwater overdraft. Therefore, to reduce this groundwater depletion, Haryana and Punjab implemented “the acts”, called “Prevention of Subsoil Water Act, 2009”, which prohibited rice cultivation before June 15. However, this delayed Kharif cultivation by 2-3 weeks and reduced the window for farmers to harvest rice and prepare their fields for the upcoming Rabi cultivation during November-March. Consequently, to facilitate the timely clearance of their fields, these farmers practice crop residue burning, which exacerbated ambient air quality in the world’s most polluted regions.

In addition to the acts, there are other factors that significantly contribute to ambient air pollution, such as increased industrialization, vehicle pollution, labor migration to urban/industrial sectors, etc. This leads to central questions,

1. Did the policy reduce groundwater depletion?

2. Did the policy increase air pollution?

We use satellite data from NASA-MODIS and groundwater monitoring data to answer these questions. Using a balanced panel from 2002-2016, we estimated the impact of the acts on (1) groundwater levels in a difference-in-difference model with synthetic control and (2) aerosol optical density (AOD) levels (an indicator of air pollution) in a difference-in-difference-in-difference model. Firstly, the Normalized Difference Vegetation Index analysis suggests that the acts delayed the monsoon cultivation season. However, acts did not significantly alter groundwater depletion and AOD trends. We improved our model robustness by controlling for meteorological factors contributing to AOD and groundwater levels and the spillover effect to control states. Our findings contribute to identifying the robust causal impact of environmental policies and their intended and unintended consequences on related resources.

Key Words: Groundwater Conservation, Environmental Policy, Air Pollution, Econometric Analysis, India

JEL Code: Q25, Q53