Cooperation in a Hydro-Geologic Commons: New Institutions and Pricing to Achieve Sustainability and Security

Abstract

"We propose a regional cooperative water management system that combines aspects of a nonprofit regional utility and a representative governing body. The conceptual basis is temporal economic efficiency. To help the utility make acceptable management decisions, a representative body of water users would express willingness to pay for water security relative to values of current water use and other consumption. Established limits on groundwater withdrawal would ensure sustainability and be sufficient to determine water prices through the balance of supply and demand. Security in terms of groundwater storage would be achieved through investment in recovery/recycling. Simulation modelling indicates that water prices over time could fall as investment and storage increase. While a traditional market could improve spatial allocation, it would not necessarily address sustainability or provide for investment."

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Keywords

markets, cooperation, institutional design, sustainability, water management

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