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Opportunistic behaviour by private irrigators within a capacity-sharing regime

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  • de Lange, Willem J.
  • Vink, Nick

Abstract

The concept of capacity-sharing (as a specific type of demand-orientated water management strategy) is a relatively newcomer on the South African water management regime and much debate is currently under way regarding the viability of the concept for the South African context. One of the main features is that it decentralises and integrates water management to a much greater degree than state-dominated management regimes. However, as the concept of capacity-sharing allows a greater degree of decision-making autonomy to the private decision-maker, the question could be asked to what extent the management of a capacity-sharing regime would be exposed to opportunistic behaviour from private irrigators. If it is heavily exposed, there are considerable scope for opportunistic decision-making behaviour under private decision-makers and therefore problems of moral hazard / adverse selection and rent seeking could present itself. Therefore, the question arises what safety features do capacity sharing present to confine possible opportunistic decision-making practices. This article discusses two areas within a capacity-sharing regime that are likely to be exposed to opportunistic decision-making behaviour. Possible safety-features from capacity sharing to account for this type of behaviour are identified and discussed briefly. This article concludes with the notion that capacity sharing does feature some properties that could minimise opportunistic behaviour from private decision-makers.

Suggested Citation

  • de Lange, Willem J. & Vink, Nick, 2003. "Opportunistic behaviour by private irrigators within a capacity-sharing regime," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 42(4), December.
  • Handle: RePEc:ags:agreko:9500
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    Resource /Energy Economics and Policy;

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