Groundwater resources are increasingly relied upon to provide vital sources of clean drinking water and irrigation for food production throughout the world. Groundwater extraction impacts the dynamics of complex hydrogeologic systems in ways which may degrade the quality and quantity of water available for human and ecological systems in the future. The proposed research seeks to examine the feedback between human and natural systems in the context of groundwater resources through the combined use of experimental economic techniques and hydrogeologic modeling. The research improves understanding of human decision making and the role of policy and psychological context in a dynamic common groundwater resource that is characterized by realistic hydrogeologic features.
A better understanding of how physical feedbacks, information, and system complexity affect individual decision-making allows both economists and hydrogeologists to develop models that better integrate groundwater dynamics and human behavior previously considered to be exogenously determined in models from the respective fields. The work helps to inform the public and policy makers on how to better tailor management policies to improve the efficiency and sustainability of groundwater resources. This research moves beyond previous work in this area by integrating models that are motivated by real-world groundwater management situations. While the research is general scope, it has implications for a variety of situations, including where aquifers are at risk of depletion, such as in California's Central Valley; situations where excessive pumping of an aquifer can lead to contamination of the entire resource, as in the case of arsenic poisoning in parts of Bangladesh; and in instances where pumping leads to sea water intrusion, which influences users differently depending on location, such as in coastal regions of the United States. These hydrogeologic settings produce situations in which human decision makers face differential external costs associated with groundwater pumping and also the potential for catastrophic failure of the resource. The experiments also contribute to a better understanding of the role of institutions such as voting, regulatory penalties and communication within a complex common-property resource.
The use of groundwater impacts the dynamics of complex hydrogeologic systems in ways which may degrade the quality and quantity of water available for human and ecological systems in the future. Worldwide, groundwater is increasingly relied upon to provide vital sources of clean drinking water and irrigation for food production. The goal of this research was to examine the feedback between human and natural systems in the context of groundwater resources through the combined use of experimental economic techniques and hydrogeologic modeling. The research sought to improve understanding of human decision-making and the role of policy as it relates to dynamic common groundwater resources that are characterized by realistic hydrogeologic features. This research moved beyond previous work in this area by integrating models that are motivated by real-world groundwater management situations. These hydrogeologic settings produce situations in which human decision-makers face differential external costs associated with groundwater pumping and also the potential for catastrophic failure of the resource. This research has contributed to a better understanding of the role of spatial groundwater features, management institutions, and regulatory policies on influencing behavior within a complex common pool resource. Our research has focused on five interrelated projects that utilize laboratory economics experiments to investigate human behavior with respect to groundwater resources. (1) Pumping behavior in a spatially explicit aquifer: This project investigated the effect of hydrogeologic parameters on individual groundwater pumping behavior. The model of the groundwater resource relied on a series of analytical 'Theis' equations and corresponding image wells to account for the aquifer boundaries. Behavior in this more realistic groundwater model was then compared to behavior in a simple 'bathtub' model as has been traditionally used in the economics literature. The results highlighted the fact that more realistic, spatially explicit models of groundwater resource dynamics tended to produce less myopic individual behavior, although resource use was still higher than what would be considered socially optimal. (2) Entry and pumping effort in a groundwater resource: The results from these experiments show that spatial considerations are important in determining both whether subjects choose to pump groundwater as well as how much groundwater they choose to pump. Subjects in the experiments tend to pump more than is socially optimal and the option to exit affects pumping behavior. The results show that subjects are more likely to enter an aquifer that is shared commonly by all players, given that the external costs of their use can be distributed to others. The results also illustrate that externalities associated with groundwater pumping are higher in the commonly shared aquifer, leading to greater inefficiencies. These outcomes are in-line with theoretical explanations and help to illustrate that common pool resource inefficiency comes about due both to entry behavior and pumping behavior. (3) Behavioral effects of groundwater contamination potential: This work explores behavior in a realistic groundwater resource where the potential for contamination is present. In addition to externalities related to the quantity of groundwater use, pumping groundwater often presents the potential for catastrophic external costs when it causes or accelerates the migration of contaminants. The potential for this type of catastrophic cost influences behavioral incentives, and behavior of groundwater users depends on the information provided to them about the risk of contamination. The experiments that were conducted altered the degree of information that groundwater users had related to the movement of potential contaminants and the behavior of other group members. (4) Pumping tax and redistribution experiments: This set of experiments was designed, programmed and carried out during fall 2013 and spring 2014. Specifically, the experiments imposed on subjects the efficient marginal tax rate in a dynamic groundwater setting. The tax rate was held constant across treatments, but different forms of lump-sum redistribution were utilized across treatments. Some treatments had a cutoff level of groundwater pumping, below which no taxes were paid, while others included a lump-sum payment that was identical across group members. In addition to making pumping decisions under the different tax treatments, subjects also provided feedback about their preferences for the policies both from an individual and group standpoint. (5) Regulatory policy at the intensive and extensive margins: Similar to the experiments described in (4) this phase of the study implemented regulatory policies that increased the cost of using groundwater. Two separate types of regulatory tools were utilized, one where just the decision to pump groundwater was made more costly but was not a function of the quantity pumped (extensive margin tax) and one where the magnitude of the tax bill was a function of the quantity pumped (intensive margin tax). These policies were designed to reflect two approaches that have been utilized in the field to reduce groundwater use. Each subject in the experiment faced both types of regulatory policies in addition to a combined policy and a baseline where no policy was implemented.
