Abstract

The design of mechanisms for sustainable irrigation water management requires a deep understanding of the water value for local communities. We present the results from a lab-in-the-field incentivized game that can inform the valuation of irrigation water among small farmers in Colombia. In this game, two players divide a jointly endowed agricultural land plot, where some divisible units have direct access to irrigation water.   Although the induced cost of irrigation water in our game was one token, farmers paid between 2.1 and 3.5 times this cost. With this evidence in hand, we characterize a general bargaining game that can be employed to inform environmental valuation in settings with relevant use conflicts. We show that this  identification of overvaluation holds for a broad set of game solutions and out-of-equilibrium responses.

Practical information