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Policy Leakage or Policy Benefit? Spatial Spillovers from Conservation Policies in Common Property Resources

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  • Mani Rouhi Rad
  • Dale T. Manning
  • Jordan F. Suter
  • Christopher Goemans

Abstract

Voluntary, incentive-based policies are often offered to resource users to address the overexploitation of common property resources. Spillovers from these policies have important implications for policy effectiveness. Considering different externalities that can affect producers’ irrigation decisions, we investigate whether permanently retiring groundwater rights impacts groundwater use among active neighboring groundwater users. We find that enrollment in the retirement program causes neighboring wells to initially pump less groundwater on average. However, water use reductions are only temporary, due to relative increases in stock levels over time. The results imply that policies that retire water rights may conserve more water than anticipated in the short term, but, over time, higher resource stocks could lead to policy leakage. We also present evidence that the decrease in groundwater use is driven by the shared resource stock. Our results provide empirical evidence for the importance of spatial spillovers related to common property resource management.

Suggested Citation

  • Mani Rouhi Rad & Dale T. Manning & Jordan F. Suter & Christopher Goemans, 2021. "Policy Leakage or Policy Benefit? Spatial Spillovers from Conservation Policies in Common Property Resources," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 8(5), pages 923-953.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/714148
    DOI: 10.1086/714148
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    Cited by:

    1. Godwin Kwabla Ekpe & Anna A. Klis, 2023. "Spillover Effects in Irrigated Agriculture from the Groundwater Commons," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(3), pages 469-507, November.
    2. Andrew B. Rosenberg, 2020. "Targeting of Water Rights Retirement Programs: Evidence from Kansas," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(5), pages 1425-1447, October.
    3. Rouhi Rad, Mani & Suter, Jordan F. & Manning, Dale & Goemans, Christopher, 2020. "Subsidies vs. subsidies in the conservation of common property resources," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304401, Agricultural and Applied Economics Association.
    4. Godwin Kwabla Ekpe, 2024. "Modeling and evaluating marginal pumping fees in groundwater commons: do varying scarcity levels matter?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 26(3), pages 563-590, July.
    5. Dietrich Earnhart & Nathan P. Hendricks, 2023. "Adapting to water restrictions: Intensive versus extensive adaptation over time differentiated by water right seniority," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(5), pages 1458-1490, October.

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