Introduction

Collective action, whether voluntary or through government intervention, is pervasive in water resource systems. Five principal reasons account for this observed regularity. First, the technology of water resource utilization involves strong non-convexities, mostly in the form of indivisibilities and sizable economies of scale. A market structure characterized by natural monopoly is likely to emerge under free market conditions. Some form of public regulation designed to minimize potential monopolistic misallocation of resources and maldistribution of income is consequently implemented. Second, products and services generated from water resources have both private market and public good dimensions. These can be characterized as impure goods (Rausser and Stevens 2009). Third, water resource systems are often characterized by strong externalities (e.g., drawing water from a common aquifer). Some form of collective action is needed to remedy the potential market failure. Fourth, governments may pursue certain non-economic goals (e.g., increased settlement in particular arid regions) whose attainment requires substantial public support and involvement in water resource development and distribution. Fifth, politically powerful groups can benefit from state intervention in the resource system. Such groups are often instrumental in bringing about public intervention in order to realize the potential gains.

As collective action evolves, market-coordinated, individual decision making is progressively supplanted by group choice processes. Furthermore, efficacy considerations dictate appropriate organizational structures that, in the case of collective action, feature a coordination and control center serving as the principal focus of group decision making.