Experimental Economics-Living Lab Loop in Water Resource Management

Efficient and sustainable water management is imperative due to the mounting pressure on global water supplies from over-exploitation, desertification, and pollution. Integrated Water Resource Management (IWRM) strategies have demonstrated efficacy in decision support; however, a more comprehensive integration of participatory and economic methodologies is required. The objective of this research is to enhance water resource management through collaborative, stakeholder-driven innovation by integrating experimental economics with Living Labs (LLs). Living Labs offer genuine environments for collaborative creation, enabling scientists and stakeholders to resolve water-related concerns such as supply, demand, and scarcity. These environments establish a connection between controlled experimental conditions and real-world applications, offering a comprehensive understanding of policy formulation and behavioral reactions. We use the Limassol Water Futures Living Lab (LWFLL) as a case study that is dedicated to the creation of a comprehensive, intelligent decision-making framework that will enable the effective management of water resources in the presence of unpredictable climate conditions. LLs can be strengthened and improved by economic methodologies, particularly in water valuation, through integrated frameworks that account for environmental externalities and opportunity costs. Real-time input is provided by technological innovations such as smart meters, desalination technologies or soil moisture sensors, which enables dynamic pricing models to accurately depict the economic and environmental costs associated with water consumption. Experimental economics' external validity is enhanced by the integration of behavioral insights and experimental approaches into LLs, which places interventions in real-world settings.