Attitudes, Preferences and Decision Making Behavior

Groundwater has become one of the most important freshwater sources worldwide. Population growth, socio-economic development, changing consumption patterns as well as the expansion of irrigated agriculture have increased the pressure on water in general and on groundwater in particular. As many aquifers are over-exploited or are at the point of depletion, understanding how groundwater is used and how it can be managed is essential to secure long lasting access and use of the resource. In the dissertation, a special focus is put on the rural-urban interface where most of the water used by the domestic, industrial, and agricultural sector is sourced form. The rural-urban interface of the Indian megacity Bengaluru serves as the research area as it exemplifies many characteristics of fast growing and rapidly urbanizing areas. The dissertation consists of three papers which consider different aspects of groundwater use and management along the rural-urban interface. The first paper analyses the risk attitudes and time preferences of households. Having a good understanding about individual risk attitudes and time preferences can contribute to improve models which deal with intergenerational distribution of, for instance, groundwater resources or help to improve cost-benefit analysis for policy evaluation. The Holt and Laury task as well as the Coller and Willams task were carried out to experimentally elicit risk attitudes and time preferences, respectively. The results of the paper indicate that the sample is slightly risk averse but highly impatient. People living in more rural areas reveal lower discount rates than the urban population – even though the urban population is on average wealthier than the rural population. Differences in risk aversion between the rural and urban population were not statistically significant. The second paper analyzes the effects of household location and weather variability on the adoption of borewell technology. Understanding these effects can help to design policies that ensure smallholders‘ livelihoods and the functioning of ecosystems in drought-prone areas. A semiparametric hazard rate model is used to analyze determinants of the borewell adoption rate. Different rainfall variables as well as a two-dimensional penalized spline (P-spline) are incorporated to capture the effects of household location. Results show that proximity to the city center and to roads accelerates adoption rates. In terms of weather variability, a higher amount of total annual rainfall decelerates adoption rates whereas higher amounts of rainfalls during the southwest monsoon, the most important cropping season, accelerate adoption rates. Furthermore, off-farm employment decreases adoption rates. The third paper analyzes groundwater extraction decisions and assesses different designs of groundwater management institutions. In total three designs are evaluated on their effectiveness to reduce water extraction behavior of groundwater users: externally imposed reward-based and punishment rules as well as communication. Moreover, it is assessed how different user types affect the outcome of these institutional designs. To do so, a framed field experiment was conducted. Results indicate that all treatments can prolong the life of the resource but reward-based and punishment rules seem to be more effective than communication. Moreover, we find that user type behavior identified in the baseline trial is persistent in the treatment trial despite interventions