ABSTRACT
There has been an unmistakable revival of growth in Indian agriculture during 2004–2014, with agriculturally backward states such as Rajasthan and Madhya Pradesh breaking out of their long period of stagnation and moving onto a high growth path. In these states, rapid agricultural growth as the pathway out of poverty has been based on the intensification of the use of groundwater reserves, now facing the danger of overuse. This raises the question whether there is an inevitable trade-off between poverty eradication and environmental balance in a poor, backward agrarian economy. In economic theory, the presumed trade-off between environment quality and growth of per capita income is often formulated in the form of an Environment Kuznets Curve (EKC). Using the growth experience of two relatively backward Indian states, this chapter shows that the EKC-type relationship will not hold true if the stock of natural resources (such as groundwater reserves or soil fertility) is finite and if their depletion causes an irreversible damage. Hence, in place of the current and environmentally unsustainable growth strategy, we need to adopt an ecosystem perspective on water, establishing a framework that combines poverty alleviation with environmental protection.
