Experimental Design
This study will explore watershed and water management, focusing specifically on how upstream and downstream farmers can collaborate to ensure sustainable and equitable access to water resources, particularly for irrigation. Ten watershed user group members will be invited as participants and randomly assigned locations along a waterway. They will engage in an irrigation game, divided equally between upstream and downstream user groups, reflecting real-world scenarios where water users are assigned specific positions along a waterway. They will be randomly assigned positions along the waterway, numbered 1 to 10, with positions 1-5 representing upstream users and positions 6-10 representing downstream users. Each round, participants will begin with an equal endowment of 30 Ethiopian Birr (ETB), symbolizing their initial resources. The experiment will consist of seven rounds: two baseline rounds for practical familiarization (Rounds 1–2) and five treatment rounds (Rounds 3–7). The study will involve 640 participants, who will be randomly assigned to one of four experimental groups, each exposed to different interventions. The first group will serve as the control group and will not receive any intervention, providing no variability for comparison. The second group will participate in a compensation game that offers monetary incentives to encourage responsible upstream watershed management effort and water use. The third group will engage in ‘yewuha abat’ intervention, coupled with downstream monetary compensation for upstream player efforts to sustainable water resource management. Lastly, the fourth group will participate in ‘yewuha abat’ intervention, which incorporates both compensation and penalties. The penalties will be applied if participants fail to meet a minimum compensation threshold for downstream water users, based on water utilization for upstream water users.
Control: In the control group, all participants receive an equal initial endowment of 30 ETB per round and participants operate independently, focusing on local watershed and irrigation management. Upstream and downstream users make individual investment decisions, and water extraction occurs sequentially, with upstream users extracting first. This baseline scenario provides a reference point for evaluating the impact of subsequent interventions.
Compensation: Treatment one introduces a compensation scheme. Downstream users decide how much of their endowment to contribute to a compensation fund, which is then distributed to upstream users. Upstream users invest their initial endowment plus the compensation into watershed management. Water extraction follows, with upstream users proceeding first. Downstream users have an additional investment stage simultaneously with the compensation stage to invest in local watershed management and canal maintenance. The amount of water available is determined by public investments, and participant payoffs are calculated based on remaining endowments and water extraction.
Compensation with Yewuha Abat: Treatment two builds upon the compensation scheme by incorporating local water governance through ‘‘Yewuha Abat (local institutions)’’ framework. Participants elect representatives from both upstream and downstream groups, who then communicate and set compensation and water utilization. These representatives set a minimum compensation threshold and promote best water management practices. This treatment aims to assess how local governance enhances collaboration and fairness.
Compensation with Yewuha Abat and Penalty: Treatment three further extends the local governance by introducing penalties for non-compliance. Representatives set water to be released for downstream and penalties, and if the upstream group fail to release water, penalties are imposed and redistributed to the downstream group. This treatment explores the effectiveness of penalties in promoting adherence to agreed-upon water usage. In each treatment, participant decisions, and payoff outcomes are recorded to analyze the impact of different interventions on cooperation and sustainable water resource management.