Transactions Papers

Using market mechanism to stimulate sustainable use of the non-renewable environmental resource (groundwater) in Barind Tract of Bangladesh

Anutosh Das, Sumaia Kashem, and Mahamudul Hasan
Pages: 39-48Published: 15 Apr 2021


Agriculture, the main economic driver of Barind Tract, is highly dependent on groundwater for surface water paucity in the area. Notwithstanding, farmers use water capriciously due to its low price that makes a substantial drop in the water table. In this context, the research attempts to determine a market-based water pricing mechanism to encourage an optimal use of the scarce non-renewable resource. Required data was collected by questionnaire survey, Focus Group Discussion (FGD), Contingent Valuation Method, expert-opinion survey and subsequent literature works. The results reveal that depletion level has arrived at 20, 11, 7.5 feet in high, mid and low tract respectively over the last 22 years, which results in a number of economic-environmental externalities in the area. The research monetarily evaluated the cost of externalities and incorporated it with the marginal cost of extraction to increase efficiency of an existing pricing system. Regarding human reaction to price elasticity, the new price can be a reliable attempt to reduce an overconsumption pattern of water. Quantity of consumed water can be reduced to 14190.4 m3, 17759.59 m3 and 38510.6 m3 in a year in high, mid and low tract area respectively with its implementation. The research will serve as an initiative to conserve the valuable groundwater resource for future generations by managing consumer practice.


Groundwater; non-renewable resource; cost of resource degradation externalities; pricing mechanism; consumer practice