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`FARMERS are suffering on both sides of the border. When the reservoir was created decades ago, it was hoped that it would provide enough water for farming on both sides. But since 1992 water level is falling and today it is barely 10 per cent full. Farmers on one side have had to leave their crops to rot in the fields. Rainfall has been low for a decade. As water supplies deteriorated, so have the relations between the two sides. One side is complaining that the other has not honoured the treaty entered into 60 years ago, reneging on the promised supply of water. But impartial observers feel that the drought is partly man-made. The population has been growing and the farmers have shifted to thirstier crops.'

Does it sound all too familiar? However, this is not the story of Karnataka and Tamil Nadu sharing water. Actually, this is the story of the US and Mexico. Despite the US producing satellite evidence of "unassigned water" available with Mexico, it is a classical Mexican stand-off... No wonder, the sharing of water is universally a tricky business and it has been the experience at any time that even if the current dispute is settled it will hardly dent the long-term problem. Therefore, I often wonder why economists leave it to engineers who can at best collate rainfall run off data and produce cold statistics which is no help when feelings are heated.

Economists are always eager with their prescriptions for alleviating poverty, balancing international trade and coaxing cooperation. Water economics may not be as exciting as monetary policies, fiscal deficits or tweaking interest rates. Yet, let them turn their attention to sharing of waters and suggest ways of allocating resources in the best possible manner to attain overall economic efficiency, with both parties avoiding wasting of money and effort in annoying each other in every year of drought, not to mention additional costs predictably incurred in bandhs, rail and road stoppages and human lives. Economists agree that an efficient and competitive system selects that allocation that minimises the cost. Although, both Karnataka and Tamil Nadu contribute less than 5 per cent of the rice production in India, Tamil Nadu appears better off with higher net domestic product, per capita income, per capita electricity consumption and yield per hectare. On the last point, Tamil Nadu is in a better position to take advantage of its farm efficiency.

However, since it is also relatively ahead in the value chain it may make more sense if in drought years water is not lost due to evaporation and in conveyance but is used close to the catchment to conserve the precious resource.

In his delightfully witty book, Armchair Economist, Steven E. Landsburg says that there are two technologies to produce cars. One, to manufacture them at Detroit and the other to grow them in Iowa in the US.

The second technology is to plant seeds in Iowa and harvest wheat, load them in ships to Japan and when the ship comes back to the US, cars will come in those ships. By this process, both Iowa and Japan will stick to trades where they are efficient. The task of producing given quantity of crops or cars can be allocated in many ways.

Applying this to our situation, if Tamil Nadu, with its skill and tradition of hard work, has established a reputation for efficiency in production of cars, trucks and motorcycles and their parts, can we hope to trade cars for crops, with Karnataka side-stepping the Cauvery imbroglio?

R. Sundaram

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