Cooperation and informal social institution: experimental evidence from rural irrigation canal management in northwestern China

This study aims to promote cooperation in the maintenance of irrigation canals in vast rural areas of north-west China. Due to the extremely limited precipitation and the depletion of underground water, efficient irrigation systems are critical to the survival of villages in those areas. An efficient operation of irrigation canals, however, requires close and large-scale cooperation among Chinese farmers. Cooperation at such a level is a rare phenomenon after the Household Responsibility System was introduced and the collapse of the collective agriculture in early 1980s in China. This study attempts to propose effective institutions to increase cooperation among Chinese farmers. The study will take place in Heihe River basin, Gansu province, China. We investigate the effectiveness of two social institutions in promoting cooperation in an artefactual field experiment: a social reward (and punishment) institution where the member contributing most (least, respectively) is publicized. The two institutions are easy to implement, and the basic elements of our social institutions – social punishment and social reward – underlie many other institutions, and thus our findings can be easily extended to other forms of institutions. Based on the findings in the previous step, we implement the more effective social institution in the field and examine the effectiveness of the institution. We also compare farmers’ real levels of cooperation with their contributions in the lab.