2016 NGWA Groundwater Summit

The Effects of Self-Imposed Economic Incentives on a Groundwater Commons

Monday, April 25, 2016: 11:00 a.m.
Confluence Ballroom C (The Westin Denver Downtown)
Steven Smith, PhD , Economics, Haverford College, Haverford, PA
Krister Andersson, PhD , Political Science, CU Boulder, Boulder, CO
Kelsey Cody, Master of Science , Environmental Studies, CU Boulder, Boulder, CO
Michael Cox, PhD , Environmental Studies, Dartmouth College, Hanover, NH
Darren Ficklin, PhD , Geography, Indiana University, Bloomington, IN

Many globally important groundwater aquifers are under extreme stress. Withdrawals, predominantly for irrigated agriculture, are outpacing recharge. The situation is exacerbated by increasing human demand for fresh water as well as a changing climate that alters surface water availability. With many users drawing from a shrinking common-pool of water, it is easy to fall prey to a “tragedy of the commons” and extract water at a rate exceeding the social optimum. Some attribute the current crisis to failures of top-down governance to effectually alter water use. Even in arid areas of the world, extraction of scarce groundwater has not been well regulated. Unregulated irrigators often consider only individual pumping costs when determining how much to extract, ignoring the cost they impose on their neighbors and future irrigators. In some jurisdictions governments are starting to respond with increased top-down regulation: spacing requirements; technological standards; pumping quotas; and in some places, complete shutdown of existing wells. Despite the theoretical cost-saving benefits, few regions have imposed economic incentives due to transaction costs and political frictions. Recently, irrigators in San Luis Valley, Colorado in the United States have sought to stave off state regulation and maintain local flexibility by self-imposing a tax on the water they pump. The goal of this paper is to assess the effectiveness of this self-organized policy in altering irrigators’ behavior. We find that the intervention has led to a movement away from water-thirsty crops, relatively more use of efficient irrigation technology, and, most importantly, significantly reduced volumes of water extracted. Our results show that self-governance and economic incentives are viable alternatives to top-down, command-and-control regulation in an era of global water stress.

Steven Smith, PhD, Economics, Haverford College, Haverford, PA
Steven Smith, Ph.D., Economics, University of Colorado, Boulder 2014. Fields: Natural Resource and Environmental Economics, Economic History, New Institutional Economics. M.A., Economics, University of Colorado, Boulder 2011. B.A., Mathematics, magna cum laude, DePauw University 2007.

Krister Andersson, PhD, Political Science, CU Boulder, Boulder, CO
Krister Andersson (Ph.D., Indiana University, 2002) joined the faculty in 2005. His current research focuses on the politics of environmental governance in developing countries. Andersson’s research has appeared in numerous journals and he is the author of several books.

Kelsey Cody, Master of Science, Environmental Studies, CU Boulder, Boulder, CO
Kelsey Cody is a Ph.D. candidate in Environmental Studies at the University of Colorado Boulder. His dissertation research focuses on collective action and common pool resources, taking a multi-method approach to the evolution of institutions for water management in self-governing irrigation in the San Luis Valley of Colorado. He earned a B.S. in Biology at The University of California Davis with an emphasis on evolution and ecology and an M.S. from CU Boulder for a thesis on municipal and industrial water providers in the Colorado River Basin.

Michael Cox, PhD, Environmental Studies, Dartmouth College, Hanover, NH
Michael Cox is an environmental social scientist who studies community-based natural resource management, environmental governance, and the determinants of resilience and vulnerability in social-ecological systems. He has conducted empirical fieldwork-based analyses of irrigation systems in the southwest United States, Peru, and Kenya. More recently he has participated in an analysis of small-scale fisheries management in the Dominican Republic. Cox is currently conducting a synthetic analysis of large-scale environmental governance.

Darren Ficklin, PhD, Geography, Indiana University, Bloomington, IN
Darren Ficklin, Ph.D. in Hydrologic Sciences, December 2010, University of California at Davis; M.S. in Geologic Sciences (Hydrogeology emphasis), May 2007, Southern Illinois University; B.S. in Geologic Sciences (Hydrology emphasis)/Minor in Chemistry, May 2004, Indiana University.