COLLABORATIVE RESEARCH: An Experimental Economics Investigation of Groundwater Resource Dynamics

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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. This 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.