Bargaining and Devolution in the Upper Guadiana Basin |
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Authors: | Carmen Marchiori Susan Stratton Sayre Leo K Simon |
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Institution: | (1) Department of Environmental Economics and Policy, London School of Economics and Political Science, London, UK;(2) Department of Economics, Smith College, Seelye 305, Northampton, MA 01063, USA;(3) Department of Agricultural and Resource Economics, University of California, Berkeley, CA, USA; |
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Abstract: | Increasingly, central governments approach contentious natural resource allocation problems by devolving partial decision-making
responsibility to local stakeholders. This paper conceptualizes devolution as a three-stage process and uses a simulation
model calibrated to real-world conditions to analyze devolution in Spain’s Upper Guadiana Basin. The Spanish national government
has proposed spending over a billion euros to reverse a 30 year decline in groundwater levels. We investigate how the government
can most effectively allocate this money to improve water levels by utilizing its power to set the structure of a local negotiation
process. Using a numerical Nash model of local bargaining, we find that if the national government creates appropriate incentives,
local bargaining can produce water stabilization. The actual water levels that will emerge are highly dependent on the central
government’s decisions about the budget available to local stakeholders and the default policy, which will be influenced by
the relative value the government places on various financial and environmental outcomes. Our paper concludes by determining
the relationship between these relative valuations and the government’s preferences over water levels. |
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