By: Andrew Foster, Brown University ; Mark Rosenzweig, Harvard University


The article makes some strong observations:

1) Few attempts to study relative magnitudes of trade-offs between economic growth, equity, and environmental sustainability in a particular setting or context. The probable reason is the difficulty of efficiently collecting data on a sufficiently large geographical and temporal scale to capture important differences in rates of productivity growth

2) There is evidence that community management is most effective when it involves relatively homogeneous groups in terms of landholding. Perceptions about for and by whom the rules were designed were also play an important role in determining compliance–compliance was low when it was perceived that rules were designed by the local elite and particularly low when they were designed by government officials. This further ratifies the learning that democratically made policies have greater implementation success (refer network paper here)

3) An effective water market also does not exist in these areas partly because of a perception that it is immoral to charge for a natural resource that in principle belongs to the community.

4) Using observations regarding well interference (when groundwater withdrawn by a well in one field impacts the neighboring field's water availability)  as a potential source of coordination failure among neighboring farmers,  the study shows that the problem of the “tragedy of the commons” in the context of groundwater is unusual in the sense that, in addition to generating negative spillovers ( farm profitability decreases with neighbors’ groundwater usage), groundwater extraction exhibits strategic complementarity (groundwater use of an irrigating farmer is increasing in the groundwater use of his neighbors).

5) From a policy perspective, there does not seem to be any alternative to finding ways to enable to the buying and selling of water at the local level for equity and sustainability.


The paper acknowledges the difficulty of governing water through pricing and that Informed policy interventions on a large scale may be difficult for a critical natural resource like water. However, as the article shows effective policy can be made for, smaller homogeneous groups such as for virtual water supply chains which collectively become responsible for producing a policy outcome. Such a chain – can be seen as a sort of ‘homogeneous group’. The entities in the chain have a mutual dependence with internal information flows that make data tracking possible and policy compliance desirable. Such a policy becomes desirable because it builds in individual water management efforts into a larger framework which gives the individuals the incentive to rise beyond the negative externalities i.e. to be water efficient despite the tragedy of commons effects. 

'WUE' adaptation/evaluation/case study possibilities

- Are trade-offs between economic growth, equity and sustainability easier to study and measure when a Virtual Water Supply Chain is taken as the primary unit of measurement?

-Do virtual water supply chains reflect the characteristics of 'homogeneous groups' and hence will the effective water management hypothesis for homogeneous groups hold for VWSC?

-Can VWSC based Water Use Embedding policies provide the incentive to individual water users to rise above the externalities caused by the 'tragedy of the commons' ?