Economic Incentives and Conservation: Crowding-in Social Norms in a Groundwater Commons

Steven Smith

No 2017-08, Working Papers from Colorado School of Mines, Division of Economics and Business

Abstract: Price-based interventions can be corrective where users extract from a common resource, but may also impact existing social norms, often crowding them out. In contrast, I find a pumping tax implemented by a group of irrigators in Southern Colorado effectively crowded-in pro-conservation norms, enhancing the financial incentive's impact. Using a unique, spatially oriented panel-data set of groundwater wells, I separate the direct role of increased pumping costs from the indirect effect transmitted through altered conservation norms. To quantify conservation, I estimate how pumping at one well responds to pumping at nearby wells, instrumenting with pumping permits, and interact that behavior with a difference-in-difference framework. The fee directly accounts for approximately 61% of the reduced pumping and the remaining 39% comes from crowding-in conservation norms. I hypothesize the internal process provided a signal of group commitment and the knowledge that others are paying a fee lead to more unconditional conservers.

Keywords: Irrigation; Groundwater; Climate Change; Conservation; Social Norms (search for similar items in EconPapers)
JEL-codes: H23 Q15 Q25 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2017-10
New Economics Papers: this item is included in nep-env and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://econbus-papers.mines.edu/working-papers/wp201708.pdf First version, 2017 (application/pdf)

Related works:
Journal Article: Economic incentives and conservation: Crowding-in social norms in a groundwater commons (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:mns:wpaper:wp201708

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