Impact of communication and information on a complex heterogeneous closed water catchment environment

This paper uses an experimental design that combines the use of an environmental levy with community involvement in the formation of group agreements and strategies to explore the impact of information and communication on water use in a complex heterogeneous environment. Participants in the experiments acted as farmers faced with monthly water demands, uncertain rainfall, possible crop loss, and the possibility of trading in water entitlements. The treatments included (1) no information on environmental consequences of extraction, (2) the provision of monthly aggregate environmental information, (3) the provision of monthly aggregate extraction information and a forum for discussion, and (4) the public provision of individual extraction information and a forum for discussion giving rise to potential verbal peer sanctions. To account for the impact of trade, the treatments were blocked into three market types: (1) no trade, (2) open call auctions, and (3) closed call auctions. The cost to the community of altering the natural flow regime to meet extractive demand was socialized through the imposition of an environmental levy equally imposed on all players.