This study examines the impact of long-term exposure to resource scarcity on farmers’ cooperation. A
historical irrigation water quota system in western China provides an opportunity to measure exogenous variation of water scarcity within an otherwise homogeneous region. We use the ratio of the arable land to the irrigation water quota of each village as our measure of water scarcity. Moreover, we use survey questions to measure collective actions in irrigation activities and we use a public goods game to measure cooperation norms in rural communities. We find that irrigation water scarcity not only induces better irrigation management practices and outcomes, but also fosters a stronger cooperation norm.
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