How transaction costs obstruct collective action: The case of California's groundwater

Ayres, Andrew; Edwards, Eric C.; Libecap, Gary D.

doi:10.1016/j.jeem.2018.07.001

Cited by 48 publications

(25 citation statements)

References 37 publications

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“…In the 309 basins with no property rights, there are few wells and water values are low. Ayres, Edwards, and Libecap (2018) analyze why there is such variation in property rights regimes, particularly in the basins where overdraft has inflicted major costs. As with oil and gas reservoirs, groundwater basins are not uniform in the impact of over draft.…”

Section: Open-access Losses In Groundwater and Property Rights Solutionsmentioning

confidence: 99%

“…In their analysis of the 445 California basins, Ayres, Edwards, and Libecap (2018) find that user and resource differences significantly affect whether or not pumpers will agree to assign more definite water rights. Benefits rise as the resource becomes more common and as groundwater values increase.…”

Section: Open-access Losses In Groundwater and Property Rights Solutionsmentioning

confidence: 99%

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Douglass C. North: Transaction Costs, Property Rights, and Economic Outcomes

Libecap

2018

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Thanks for very useful comments from Mary Shirley of the Coase Institute. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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Section: Open-access Losses In Groundwater and Property Rights Solutionsmentioning

confidence: 99%

Section: Open-access Losses In Groundwater and Property Rights Solutionsmentioning

confidence: 99%

Douglass C. North: Transaction Costs, Property Rights, and Economic Outcomes

Libecap

2018

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“…This mobility contributes to the transmission of negative externalities from one user to others. In such instances, users are likely to impose negative externalities on one another, resulting in excessive use of groundwater, and therefore the user heterogeneity raised transaction costs to reduce such externalities [18]. This phenomenon is widely known as the "tragedy of the commons" [19].…”

Section: What Is Groundwater Governance?mentioning

confidence: 99%

“…Second, the "joint-payment system" mentioned above played a role. The free-rider scenario is more likely to occur when the difference between an individual party's benefits and costs from a shared goal become large [18]. The payment system averaged out costs to reassign its water supply, thereby contributing to a solution to the free-rider problem.…”

Section: Monitoringmentioning

confidence: 99%

A Fifty-Year Experience of Groundwater Governance: The Case Study of Gakunan Council for Coordinated Groundwater Pumping, Fuji City, Shizuoka Prefecture, Japan

Endo

2019

Water

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Groundwater protection, which is effected by multiple actors at multiple levels using multiple instruments, is commonly termed “groundwater governance”. Although the concept has attracted increasing attention since the 1990s, several of its associated measures remain to be fully implemented. Most are still inchoate strategies and improvement is expected to be a gradual, long-term process. The Gakunan Council for Coordinated Groundwater Pumping (CCGP), which was established, in 1967, in Fuji City in Japan’s Shizuoka Prefecture, is an exceptional case. The Gakunan CCCP was created to deal with a common-pool resource problem where massive groundwater pumping caused seawater intrusion in the city’s coastal area due to the low cost of extraction and incomplete groundwater ownership. The Gakunan CCCP succeeded in recovering elevation of groundwater tables by connecting efforts between the public and private sectors, including information sharing, legal authority to regulate groundwater, investment in alternative water supplies, internal subsidies between groundwater users, and charge for water disposal. Previous studies have iterated that the fostering of participation from various stakeholders and dividing labor between them appropriately are key elements of successful groundwater governance. This paper investigates these factors, explores the importance of the metagovernor as coordinator, and offers a fresh perspective on the significance of groundwater governance.

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“…39 Further, the failure to define property rights to groundwater leaves it vulnerable to over extraction as farmers turn to groundwater during drought (Ayres, et al, 2018). 40 We focus, below, on flood insurance and wildfire suppression activities, which illustrate the problems at hand for land markets. They subsidize existing land uses and undermine the ability of market trades to convey information about the need to adapt to climate change.…”

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confidence: 99%

The Critical Role of Markets in Climate Change Adaptation

Anderson

Hill

et al. 2019

Clim. Change Econ.

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Markets, especially land markets, can facilitate climate change adaptation through price signals. A review of research reveals that urban, coastal, and agricultural land markets provide effective signals of the emerging costs of climate change. These signals encourage adjustments by both private owners and policy officials in taking preemptive action to reduce costs. In agriculture, they promote consideration of new cropping and tillage practices, seed types, timing, and location of production. They also stimulate use of new irrigation technologies. In urban areas, they motivate new housing construction, elevation, and location away from harm. They channel more efficient use of water and its application to parks and other green areas to make urban settings more desirable with higher temperatures. Related water markets play a similar role in adjusting water use and reallocation. To be effective, however, markets must reflect multiple traders and prices must be free to adjust. Where these conditions are not met, market signals will be inhibited and market-driven adaptation will be reduced. Because public policy is driven by constituent demands, it may not be a remedy. The evidence of the National Flood Insurance Program and federal wildfire response illustrates how politically difficult it may be to adjust programs to be more adaptive.

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How transaction costs obstruct collective action: The case of California's groundwater

Cited by 48 publications

References 37 publications

Douglass C. North: Transaction Costs, Property Rights, and Economic Outcomes

Douglass C. North: Transaction Costs, Property Rights, and Economic Outcomes

A Fifty-Year Experience of Groundwater Governance: The Case Study of Gakunan Council for Coordinated Groundwater Pumping, Fuji City, Shizuoka Prefecture, Japan

The Critical Role of Markets in Climate Change Adaptation

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