Dimitrios Zikos

Endogenous Versus Exogenous Rules in Water Management: An Experimental Cross-country Comparison

Abstract This paper draws on institutional and experimental economics to investigate the role of exogenous and endogenous rules in irrigation systems. The hypotheses we examine argue that despite the differences between socio-economic and political settings, (1) endogenous rule-crafting can help water users to overcome appropriation and provision dilemmas in water-scarce environments like in the East Mediterranean countries and that (2) in market-like water governance systems, institutions other than the market itself, are less influential for overcoming appropriation and provision dilemmas than in hybrid governance systems. These hypotheses are being tested comparing the results of field experiments conducted in Jordan, the Republic of Cyprus and North Cyprus with 70 farmers. Field experiments simulate asymmetric access to resources and are based on variations of the irrigation game by Cardenas et al. to model and test asymmetric distribution of investment, harvest and revenue that favours upstream users. Empirical evidence shows that externally imposed allocation rules are able to bring in more equal distribution of revenue among upstream–downstream users but is likely to reduce the volume of investment and revenue, without resolving issues of free-riding. The authors argue that given the opportunity, water users (small farmers in our experiments) are able to craft their own rules improving the overall performance of the group in terms of investment and revenue, with a parallel improvement of equity in distribution. The implications and policy relevance of such findings are briefly discussed as they contradict typical practices of top-down policy delivery in the selected cases.

Self-Governance and the Effects of Rules in Irrigation Systems: Evidence from Laboratory and Framed Field Experiments in China, India and Vietnam

This paper employs laboratory and framed field experiments to investigate factors influencing the behavior of irrigation users, with an emphasis on the effects of exogenously and endogenously designed allocation rules. The experiments were conducted with 36 groups of farmers and students from China, India and Vietnam. The results show that physically asymmetric access to water as a resource creates an asymmetric distribution of investments, harvests and revenues that favors upstream users. Exogenously designed allocation rules appear able to equalize the distribution of revenue between upstream and downstream users, but are also likely to reduce the volume of investment and generated revenue. Meanwhile, communication between irrigation users with the possibility of endogenously designed rules appears to have a stronger equalizing effect on asymmetric resource access but also increases overall investment, which then increases water availability in a hypothetical irrigation channel. This suggests that promoting participation of irrigation users in designing rules for water distribution, water use monitoring and sanctioning might improve the performance of irrigation systems.

The Role of Homogeneity and Heterogeneity Among Resource Users on Water Governance: Lessons Learnt from an Economic Field Experiment on Irrigation in Uzbekistan

The governance of common-pool resources, such as irrigation systems, is a highly debated topic in research. Numerous studies suggest that actors can successfully manage these resources through cooperation, especially in hybrid governance structures, if they are able to design and enforce their own rules. Thereby, certain factors, such as the composition of a group of resource users, influence the likelihood of cooperation and the performance of self-managed resource systems. This study employed an economic framed field experiment to compare the effects of externally imposed and self-set rules of water distribution on homogeneous and heterogeneous groups of irrigation users who differ in their economic endowment. The experiment was conducted with 20 farmers in an Uzbek community. Furthermore, questionnaires, group discussions and interviews complemented the analytical method. The results show that groups, homogeneous in their economic endowment are more inclined to comply with self-designed rules than groups that are economically heterogeneous. Thus, homogenous groups achieve a better performance in terms of resource maintenance and water harvest under self-governance. However, water distribution was more equal and the illegal activities decreased in both the homogeneous and heterogeneous groups with self-implemented rules. It was found that trust was a crucial factor regarding both greater individual rule adherence and more cooperative behavior within homogeneous entities compared to heterogeneous groups of irrigation users. Finally, the results support the argument that economic heterogeneity among resource users lowers the likeliness of cooperation in self-governed common-pool resource systems.