South America — Brazil/Colombia climate/water field research

Alex Pfaff, Renzo Taddei, Maria Alejandra Vélez

The purpose of this study is to experimentally investigate individual and group behavior under uncertainty. We are interested in applications of this to Common Pool Resources (CPR) under climate change. There has been a significant amount of research done on CPRs under perfect information, where the size of the resource (e.g., reservoir water, fish stocks) is known with certainty to its appropriators. However, most natural resources’ size or capacity varies according to natural patterns, such as rainfall or average sunlight exposure. Recent improvements in forecasting weather patterns make the study of the impact of forecasting information on behavior of utmost relevance, especially when one seeks to design institutions, which enable decision-makers to achieve optimal allocation of a given resource. We also wish to explore the consequence of having different users with different productivities in terms of their use of the resource. This makes not only the total amount to be extracted of great relevance, but also the way it is distributed. Standard economic theory states that users with the highest productivity should have preferential access to the resource as this maximizes aggregate welfare. However, this has important consequences in terms of the level of inequality in the distribution of wealth across individuals. This trade-off between the aggregate gain and the equitable distribution of wealth is of critical importance in Northeast Brazil, in particular with respect to the distribution of water to different types of users in the region. Finally, we are interested in the problem of investment coordination in the face of uncertain access to a scarce natural resource. If access to a natural resource is made through an ex-post market, it is possible that investment coordination failure will take place, as too many (or too few) individuals invest. We wish to compare this institutional framework to a context in which access to the resource is done by a pre-specified ordering or queue. We then wish to measure the efficiency gains (if any) that result by imposing this ordering as well as to study the gains of having individual agents purchase a place in queue, as opposed to the situation where they purchase a unit of the resource. We are then interested in investigating the group behavior under uncertainty in a variety of different hypothetical decision-making institutions, as well as studying the impact of information presentation on the decision outcomes.

Broader Impacts

• This study will further current research on natural resource management under climate change and help identify mechanisms that will allow for the optimal allocation of these natural resources such as water or fishing stocks.

CRED2 Award (2010-2015): Funding was provided under the cooperative agreement NSF SES-0951516 awarded to the Center for Research on Environmental Decisions.