Institutions and their interactions : an economic analysis of irrigation institutions in the Malaprabha Dam Project Area, Karnataka, India

Institutions play a vital role in the efficient allocation of water. However, institutions using a ‘top-down’ approach generate distortions in the water management system. Similarly, moving away from supply-side oriented water management towards demand-side oriented one within the government-dominated command and control framework will not yield the desired results. In this context, we analysed institutions governing surface water allocation in the Malaprabha river basin in Karnataka and found that the so-called demand-side oriented institutional approach introduced by the government has not produced desirable outcomes. As an alternative institutional arrangement, we have proposed the tradable water rights system within the regulated framework.