Groundwater Markets at a Crossroads: A Review of Energy Transitions, Digital Innovations, and Policy Pathways

Abstract

Informal groundwater markets, where farmers with wells sell surplus water to neighbors, are a widespread adaptive response to water scarcity, particularly in South Asia where they are most prevalent and well-documented. This review (1990–2025) examines the evolving patterns of these markets by synthesizing global literature and viewing them through the lens of three transformative trends: energy transition (especially solar pumps), digital innovations (e.g., blockchain and IoT), and new policy pathways. We synthesize literature to evaluate market structures, contract forms, efficiency and equity outcomes, environmental impacts, and the influence of energy policies and digital tools. The review assesses whether these informal trades fulfill their promise of enhancing water productivity and equity or if new challenges are creating pitfalls. Key objectives include documenting historical evolution, analyzing market performance, discussing externalities like aquifer depletion, examining policy interactions, reviewing digital pilots, exploring social inclusion, comparing governance frameworks, identifying research gaps linked to SDGs, and proposing a policy roadmap for harnessing benefits while ensuring sustainability.