Applying a Voluntary Incentive Mechanism to the Problem of Groundwater Conservation: An Experimental Approach

Andrew P. Wright and Darren Hudson

No 143030, 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida from Southern Agricultural Economics Association

Abstract: This paper uses experimental methods to examine how individuals react to a set of voluntary incentives related to the conservation of a resource. The goal was to determine whether conservation over a critical area, such as a deep portion of an aquifer, could be encouraged, and whether coordination between individuals could be induced. Participants were faced with a bidding process through which units were selected for conservation, and some participants were offered an agglomeration bonus for conserving units that shared a border. Examining how bids changed across rounds revealed the existence of a learning process; implying that a similar real-world program would need to provide a large amount of information up front in order to achieve the desired effect. Using a monetary selection constraint resulted in more units placed in conservation. The bonus did not necessarily encourage conservation at the critical area, but it did reduce participant’s bid amounts.

Keywords: Environmental Economics and Policy; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-env and nep-exp
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Persistent link: https://EconPapers.repec.org/RePEc:ags:saea13:143030

DOI: 10.22004/ag.econ.143030

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