IDEAS home Printed from https://ideas.repec.org/p/erg/wpaper/491.html
   My bibliography  Save this paper

Cooperation Against Theft - A Test of Incentives for Water Management in Tunisia

Author

Listed:
  • Wided Mattoussi
  • Paul Seabright

Abstract

This paper tests the contribution of institutions to the promotion of cooperative behavior, taking seriously the endogeneity of the institutions themselves. Theft of water by manipulation of water meters is an important constraint on the implementation of economic pricing policies, particularly in semi-arid regions of the developing world. We show how cooperative management institutions can reduce theft, improving incentives for efficient water use, by inducing peer monitoring by cooperative members. We show in a theoretical model that theft is more likely when prices are high, punishments weak, cooperatives large and the uptake of water-saving technologies low. However, cooperative membership, punishment levels and technology adoption are not exogenous but are chosen by cooperative members in response to conditions that themselves influence incentives for theft. We test the model on data from Tunisia, relying on instruments that proxy for unobservable monitoring costs to deal with the endogeneity of these proximate determinants of theft. The results provide strong confirmation of the ability of well-designed incentives to reduce theft, as well as of the tendency of individuals to adapt their behavior to the level of monitoring costs. Higher monitoring costs have a positive direct effect on the incidence of theft, and a further positive indirect effect by weakening the incentive for farmers to adopt water-saving technologies. But various features of the design of institutions can counteract these effects.

Suggested Citation

  • Wided Mattoussi & Paul Seabright, 2009. "Cooperation Against Theft - A Test of Incentives for Water Management in Tunisia," Working Papers 491, Economic Research Forum, revised Jun 2009.
  • Handle: RePEc:erg:wpaper:491
    as

    Download full text from publisher

    File URL: http://erf.org.eg/wp-content/uploads/2014/08/491.pdf
    Download Restriction: no

    File URL: http://bit.ly/2mudWVw
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ghatak, Maitreesh & Guinnane, Timothy W., 1999. "The economics of lending with joint liability: theory and practice," Journal of Development Economics, Elsevier, vol. 60(1), pages 195-228, October.
    2. Foltz, Jeremy D, 2003. "The Economics of Water-Conserving Technology Adoption in Tunisia: An Empirical Estimation of Farmer Technology Choice," Economic Development and Cultural Change, University of Chicago Press, vol. 51(2), pages 359-373, January.
    3. Sanchez, Isabel & Sobel, Joel, 1993. "Hierarchical design and enforcement of income tax policies," Journal of Public Economics, Elsevier, vol. 50(3), pages 345-369, March.
    4. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, January.
    5. Kandel, Eugene & Lazear, Edward P, 1992. "Peer Pressure and Partnerships," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 801-817, August.
    6. Bengt Holmstrom, 1982. "Moral Hazard in Teams," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 324-340, Autumn.
    7. Loehman Edna & Dinar Ariel, 1994. "Cooperative Solution of Local Externality Problems: A Case of Mechanism Design Applied to Irrigation," Journal of Environmental Economics and Management, Elsevier, vol. 26(3), pages 235-256, May.
    8. Jean-Paul Azam & Jean-Daniel Rinaud, 2000. "Encroached Entitlements: Corruption and Appropriation of Irrigation Water in Southern Pun jab Pakistan)," Development Working Papers 144, Centro Studi Luca d'Agliano, University of Milano.
    9. Besley, Timothy & Coate, Stephen, 1995. "Group lending, repayment incentives and social collateral," Journal of Development Economics, Elsevier, vol. 46(1), pages 1-18, February.
    10. Hermes, Niels & Lensink, Robert & Mehrteab, Habteab T., 2005. "Peer Monitoring, Social Ties and Moral Hazard in Group Lending Programs: Evidence from Eritrea," World Development, Elsevier, vol. 33(1), pages 149-169, January.
    11. Parkash Chander & Louis L. Wilde, 1998. "A General Characterization of Optimal Income Tax Enforcement," Review of Economic Studies, Oxford University Press, vol. 65(1), pages 165-183.
    12. Phoebe Koundouri & Céline Nauges & Vangelis Tzouvelekas, 2006. "Technology Adoption under Production Uncertainty: Theory and Application to Irrigation Technology," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(3), pages 657-670.
    13. Margriet Caswell & David Zilberman, 1985. "The Choices of Irrigation Technologies in California," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(2), pages 224-234.
    14. Feder, Gershon & Just, Richard E & Zilberman, David, 1985. "Adoption of Agricultural Innovations in Developing Countries: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 255-298, January.
    15. repec:dgr:rugsom:03e36 is not listed on IDEAS
    16. Parkash Chander, 1998. "A Stronger Measure of Risk Aversion and a General Characterization of Optimal Income Tax Enforcement," Economics Working Paper Archive 399, The Johns Hopkins University,Department of Economics.
    17. Armendariz de Aghion, Beatriz, 1999. "On the design of a credit agreement with peer monitoring," Journal of Development Economics, Elsevier, vol. 60(1), pages 79-104, October.
    18. Millock Katrin & Salanié François, 2005. "Nonpoint Source Pollution When Polluters Might Cooperate," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-27, July.
    19. Che Yeon-Koo, 2002. "Joint Liability and Peer Monitoring under Group Lending," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 2(1), pages 1-28, July.
    20. Abdulai, Awudu & Glauben, Thomas & Herzfeld, Thomas & Zhou, Shudong, 2005. "Water Saving Technology in Chinese Rice Production - Evidence from Survey Data," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24708, European Association of Agricultural Economists.
    21. James E. T. Moncur & Richard L. Pollock, 1988. "Scarcity Rents for Water: A Valuation and Pricing Model," Land Economics, University of Wisconsin Press, vol. 64(1), pages 62-72.
    22. Jean-Jacques Laffont & Mohamed Salah Matoussi, 1995. "Moral Hazard, Financial Constraints and Sharecropping in El Oulja," Review of Economic Studies, Oxford University Press, vol. 62(3), pages 381-399.
    23. Stiglitz, Joseph E, 1990. "Peer Monitoring and Credit Markets," World Bank Economic Review, World Bank Group, vol. 4(3), pages 351-366, September.
    24. Wydick, Bruce, 1999. "Can Social Cohesion Be Harnessed to Repair Market Failures? Evidence from Group Lending in Guatemala," Economic Journal, Royal Economic Society, vol. 109(457), pages 463-475, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:erg:wpaper:491. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sherine Ghoneim). General contact details of provider: http://edirc.repec.org/data/erfaceg.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.