Browsing by Author "Smith, Steven M."

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Common Pool Resources and Disturbances in Social Capital: The Case of the Taos Valley Acequias
(2012) Smith, Steven M.
"Social capital is an important element in the successful management of a common pool resource. User groups which share high levels of trust with one another reduce the costs of monitoring and enforcing rules. While theory and games highlight the importance of repeated interactions, empirical work is limited to cross-sectional analysis in which socioeconomic attributes proxy for social capital. I focus on the role of repeated interaction and estimate the impact of introducing new users (not additional) to well-established common property institutions in Taos County, New Mexico. I build a panel data set of 25 communal irrigation systems, known as acequias, from 1984 to 2008. Using satellite imagery to assess the output of each acequia in each year, fixed effects regressions are ran to measure the impact of new users being present. Other user group characteristics are included, specifically, the number of users, the economic heterogeneity of the users, as well as the cultural homogeneity of the group. The panel data and fixed effects analysis allows me to focus on the impact of the disturbance within a system. The structure of the data also permits me to correct for the omitted variable bias which likely plagues cross-sectional analysis. Fixed effects control all variables which vary across systems but not within a system, in addition to those which vary uniformly over time. I find that the introduction of new users, lowering the social capital, does negatively impact the system, though smaller shocks have less impact and the systems are resilient overtime, returning to normal levels of output after 4 years. Findings on the number of users and cultural homogeneity support prior work in that more users and less cultural homogeneity reduces output within a system. Concerning economic heterogeneity, as measured by the Gini coefficient of land holdings, within the systems increased inequality increases production whereas across systems those more equal do better. Given the resilience of the systems in this setting to small disturbances of new users, follow up work is needed to understand what about the institutional setting facilitates this in order to apply the lessons to other settings. While difficult to come by, the importance and distinction of panel data is highlighted by the Gini coefficient result and more research should address these disturbances within systems. It is important to expand our knowledge of how a single system can respond to a given disturbance."
The Relative Economic Merits of Alternative Water Rights
(2019) Smith, Steven M.
"The prior appropriation doctrine adopted by all 17 Western US States, in which water users are provided absolute, private rights to water allocated in order of first diversion, has been lauded for its incentive structure for initial development but critiqued for subsequent inequalities in water use. By contrast, Hispanic settlers of the region adopted proportional water rights. I compare the performance of proportional water rights to the more prevalent private rights (prior appropriation) using theory and empirical evidence. I test the theoretical predictions using a natural experiment where acequias (Hispanic-rooted irrigation ditches) developed in Territorial New Mexico are later divided by the formation of Colorado, exogenously forcing that subset to be subject to the priority system while those in New Mexico continue to practice proportional division today. With 1930 irrigation organization data, I first test the implications on infrastructure investment, finding that indeed more investment has been made in Colorado and increases in seniority of rights. Then, using annual satellite imagery from 1984-2011, I compare performance under various stream flow conditions, finding that the marginal product of water is generally larger under the proportional system. Finally, using survey data from 2013 I explore how governance form and concerns of these Hispanic organizations have distinctly evolved given the presence of, or lack thereof, the prior appropriation doctrine."
Trust, Repeated Interactions, and User Group Disturbances in Common Property Irrigation
(2013) Smith, Steven M.
"Common-pool resources as common property are no longer assumed to be destined to fail, but success is not inevitable. Trust and social capital have been identified as important factors in fostering cooperation, as they substitute for costly formal monitoring and enforcement of rules. This has been confirmed by both theory and empirics. However, the empirical research often is limited to cross-sectional analysis, using heterogeneity as proxies for trust, while theory emphasizes the repeated interactions of individuals. Additionally, given the myriad of variables identified in social-ecological systems to impact outcomes, the extant cross-sectional analysis likely suffers from significant omitted variable bias (OVB). I address both issues by focusing on trust as developed through repeated interactions while correcting for a large portion of the OVB problem. I construct panel data of 51 communal irrigation systems (acequias) over a 25 year period (1984-2008) located in Taos Valley, New Mexico. Having survived in the region for 150-250 years, the acequias have recently faced a new disturbance, undergoing a significant amount of turnover in the user group. This provides variation in trust developed through direct repeated interaction. Combining satellite imagery data, providing a measure of average agricultural production for each acequia each year, with user group characteristics constructed from New Mexico water right records, I explore econometrically the impact of new users. The use of panel data allows the inclusion of fixed effects, controlling for a number of unobserved variables which may be related to both turnover and agriculture. The results indicate that the systems are robust to the disturbance of new users, though smaller user groups struggle when they are subject to a large shock. The results also confirm the presence of OVB, as cross-sectional analysis here overstates the magnitude of the impact."