When and How Would Shared Aquifers be Managed?

This paper presents a conceptual model of the factors that affect the decision to cooperate in the management of shared aquifers. It shows that early cooperation with positive results can be crucial for the subsequent evolution of more sophisticated management regimes. Yet, unless the two sides heed early warnings it is likely they will react only when the quality of the aquifer deteriorates significantly. The relative invisibility of groundwater may indeed delay the realization of the critical water situation, thereby requiring expensive and difficult measures to be implemented if the aquifer is to be redeemed. But early suggestions of comprehensive-integrative structures may be counter-productive; as such structures are not needed when the use ratio is low, and they have high transaction cost. Thus, early proposition of such structures may defray lower-cost but more appropriate structures early on, thereby possibly missing the chance for creating an early positive feedback cycle. This framework is applied to the Israeli-Palestinian case. Given the loss of confidence between these two parties, and thereby escalating transaction costs, it is suggested that structures that involve third parties, such as those that are based on franchising, may become increasingly attractive in this context.