Choosing Rules to Govern the Commons: A Model with Evidence from Mexico

Abstract

I develop a model to assess distributive rules observed in field data on 48 Mexican farmer-managed irrigation systems. Households decide whether to contribute maintenance effort, the aggregate amount of which affects the level of output. Distributive rules with congruence between the sharing of collective costs and benefits elicit the highest level of effort; empirically, however, incongruent rules dominate the surveyed systems. I argue that transaction costs offset some efficiency benefits of congruent rules. I estimate a model of rule choice: inequality and the age of the water users' association strongly increase the likelihood that a system chooses proportional water allocation.

Keywords: Common property, Institutional choice, Irrigation, Mexico, Rules

JEL Classification: D70, O12, O13, O17, Q25