Difficulties in Adopting Formal Water Trading Rules within Users’ Associations

This paper attempts to explain why collective organizations in charge of managing scarce resources can face difficulties in evolving into more efficient institutions. It is framed within a literature strand that asks why institutions fail or succeed, on the basis of some skepticism about the use of rational models of social design as well as a deliberate openness to learning from cultural and biological evolution. Rational order, in the words of Vernon Smith (2003), can be thought of "as an undesigned ecological system that emerges out of cultural and biological evolutionary process: homegrown principles of action, norms, traditions and 'morality"' (469-470). However, R. Maria Saleth and Ariel Dinar (2004) have argued, for the case of the water sector, that institutions are severely constrained by path dependency, a construct that allows them to illustrate the powerful effects of history, customs, and traditions on the observed state of water institutions around the world. Saleth and Dinar concluded that path dependency poses serious constraints for change and evolution. Some authors have built on Elinor Ostrom's works to analyze water user associations around the world (Ostrom 1990, 1993, 2001; Livingston 1985; Subramanian et al. 1997). This literature teaches us how collective entities share costs, risks, and benefits. It also shows what modes of collaboration lead to more social cohesion and to more efficient ways of dealing with various sources of collective and individual risks. Uncertain water supply may be one of the most important for irrigation schemes but certainly not the only one.