Sensitivity of Compliance Regarding the Institutionality of Water Management in Situations of Water Scarcity

Climate change is reducing precipitation in various regions, impacting agriculture and economies. Adapting to these changes requires new water management strategies, necessitating effective regulations and user adherence. Effective regulations must be based on a comprehensive model of human behavior that accounts for outcome-based social preferences—such as resource and need distribution—and intention-based preferences, which consider whether scarcity arises from exogenous causes or norm violations. Previous studies indicate that humans exhibit social preferences, aversion to inequality, and prioritize intention-based decisions over purely outcome-based ones. This study proposes an experimental approach to explore how individuals respond to water use regulations during scarcity, and whether awareness of others' needs influences compliance.

Our hypotheses suggests that non-compliance rises during scarcity due to both exogenous causes and norm violations. Conversely, awareness of others' needs is expected to reduce non-compliance, potentially due to inequality aversion and an understanding that others' non-compliance is driven by necessity despite unequal outcomes. Alternatively, heightened awareness may reinforce scarcity perceptions, fostering a feedback loop that escalates non-compliance initially triggered by external factors.

A lab-in-the-field experiment tested these hypotheses. Participants engaged in an economic game sharing limited water across multiple rounds in pairs. Each round presented a scenario where total demands exceeded available supply, with a rule requiring equal division. Participants made independent decisions to either follow the rule or exceed their quota, which could disadvantage their partner. Random selection determined the implemented decision, with proportional monetary penalties for unmet demands. One group knew only their own water demand each round, while another group also knew their partner's needs. Results indicate that both groups escalated non-compliance in response to scarcity. Furthermore, non-compliance increased among individuals experiencing previous losses due to their partner's non-compliance. Surprisingly, participants aware of their partner's needs did not improve compliance compared to those unaware.