Across the globe, many low- and middle-income countries are investing in their first generation of piped water and sanitation infrastructure. At the same time, the water and sanitation infrastructure in many industrialized countries is reaching, or has reached, the end of its useful life. Governments will need to mobilize substantial resources to finance this global water and sanitation infrastructure transition and user charges (tariffs) will play an integral role in supporting these efforts.

Payments for ecosystem services (PES) programs are now high in number, if not always in impact. When groups of users pay groups of service providers, establishing PES involves collective action. We study the creation of collective PES institutions, and their continuation, as group coordination. We use framed lab-in-field experiments with hydroservices users and providers within watersheds participating in Mexico's Matching Funds program in Veracruz, Yucatan and Quintana Roo states.

Managing natural-resource allocation and environmental externalities is a challenge. Institutional designs are central when improving water quality for downstream users, for instance, and when reallocating water quantities including for climate adaptation. Views differ on which institutions are best: states; markets; or informal institutions. For transfers of ecosystem services, we compare informal trust-based institutions to enforced contracts, both being institutional types we observe commonly in the field.

This study examines the effect of long-term resource scarcity on cooperation, measured by both the irrigation management practices and a lab-in-the-field experiment. We find that greater water scarcity not only leads to better irrigation management practices and outcomes, but also fosters a stronger norm of cooperation among villagers. Our findings imply that, when facing the pressure of increasing scarcity, it is possible for local people to cooperate and provide effective collective action in resource management.

Women Collecting Water in Rural Kenya Report They Would Prefer Doing Other Activities.