The study presents alternative scenarios for the impacts of changes in the allocation of canal and groundwater on the socio-economics of wheat production. It is concluded that overall gains from wheat production can be increased by adopting effective reallocation of canal water at the distributary level. Many of the gains under the scenario will be in locations where groundwater is of poorer quality. The policy implication of this is that, under conditions of canal-water scarcity and variations in the quality of groundwater, joint management of canal water and groundwater is essential to increase overall gains from crop production. The study presents an example of ‘institutional water scarcity’ that could be addressed through effective institutions, leading to improved management of available surfacewater and groundwater resources.
