Managing water resources under scarcity: the role of social norms

Uday Kumar Jammalamadaka and Ariel Dinar

Journal of Environmental Economics and Policy, 2018, vol. 7, issue 1, 16-40

Abstract: We develop a framework that quantifies the effect of social norms on the efficient functioning of institutions and thereby their impact on effectiveness of reforms for sustaining common pool water resources under conditions of scarcity. We derive theoretical results and use numerical simulations to provide evidence for performance of a group of farmers that use a common pool resource (reservoir or aquifer) with and without norms, with various marginal utility levels from norm adherence, and with various existing (Social Planner) institutional setting considered in the theoretical model. The theoretical results suggest that with no water trade and with norm adherence, water users will always use less water than the no norms scenario. With possible inter-group water trade, norm-adhering water users would replace excess extraction with increased trade rates. Simulation results for the no-trade case suggest that with higher marginal utility values from norm adherence, the resource is sustained for significantly longer periods.

Date: 2018
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DOI: 10.1080/21606544.2017.1342566

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