Economics on the beach I: allocating stream water

It could easily have ended in a fist fight. Or more likely a plastic shovel fight. This is how it began. My kids, my wife, and I went down to a Cornish beach. A beach with an interesting feature. There is a small stream that runs high up the beach parallel to the sea for more or less the whole length of the beach. Kids find this stream almost more fun to play in than the often pretty rough sea, which is mostly inhabited by bodyboarders smashing into each other. As the stream runs essentially over and through sand with lots of stones around as well, it is very malleable. Kids (and, invariably, their fathers – mothers do not seem so keen) love to build little dams, dig up new channels, and create little pools to play in. On the given day, easily 20 to 30 kids (and some of their fathers) were happily engaged this way somewhere along the length of the stream, when suddenly the water was reduced to a tiny trickle and had stopped flowing altogether further down the stream.

An investigation was launched that quickly revealed the source of the sudden disappearance of water. One of the more ambitious projects, not only involving a father but a set of uncles as well, had been successfully carried out further upstream. The stream had been dammed so well, that the water had now found a new course much more directly into the sea, avoiding the long meandering now empty river bed. It was a project that was every father’s dream, of course, and I could see and empathize with the sense of satisfaction on all the faces. Careful planning and tireless construction work with attention to detail had led to a substantial change in our surroundings. Men (and their children) have changed nature to suit their own needs.

Yet, glorious as it undoubtedly was, the successful engineering feat had left the 20 or 30 kids downstream with nothing to play with anymore. The dam builders were approached and asked to open one of their hatches at least a little to let some water to also flow down the usual path. Reluctantly they did so. Not much later, however, the water supply downstream dwindled again. The opened hatch had been closed. This now led to subversive acts of sabotage with people opening hatches without asking for permission or explaining why they did so. This in turn left the original engineers with frequent repair work. One had a sense that the engineers knew that they were on morally shaky ground, but they tried to hang on regardless to see their project through. People were trying to avoid an open confrontation and after a couple of hours of oscillating water levels on both sides the problem was solved by the engineers finally deciding to join the bodyboarders in the sea. As by now some kids had started working down the new (but much shorter) stream, eventually some water was allowed to flow both ways.

The problem of allocating water to the different parts of the stream was certainly inefficient for some time. In that time most of the water flowed down the short new river bed that only allowed a few kids to play in it, while when the stream was flowing down the old river bed it had created happiness for many more children. The, for the most part silent, dispute over the allocation of water, was created by the absence of a clear property rights structure. The beach is a “commons ‘’. It is not owned by any one person but by all of them. Nobody has a right to an exclusive use of the stream or to decide alone on how the stream should be used. If someone owned the beach or at least the stream (this could be a government agency or a private person) beach goers could pay for any amount of water (subject to availability) going down to their desired branch with some reasonable hope that prices will solve the allocation problem. I would not really advocate this here for two reasons. One, as the issues at stake are not that very high, people in most cases find reasonable agreements through communication with the implicit threat of public shaming if people act too selfishly. And then they are better off compared to a situation with the same final allocation but with everyone having to pay. Two, it wouldn’t be nearly as much fun to watch.

 

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3 thoughts on “Economics on the beach I: allocating stream water

  1. Having spent countless hours in my youth building dams in a small river at Lago Maggiore where my family spent their summer vacations, I know very well what you are talking about. It brings to mind John Locke’s famous theory about how people acquire property in land. Locke’s problem was how to justify private property. He started from the proposition that every person owns himself and had a right to the `fruits of his labor’. But how to justify property in things not created by human labor, but found in nature – such as rivers? Locke’s answer was to say that property in land (and rivers, too) derives from `mixing labor with land’.
    The situation you describe seems to contradict this theory if ones understands ‘right’ not as a legal term but as a description of how people act – namely, in the present context, that people do not mess with the dams others have built. From your and my observation, ‘mixing your labor with the river’ gives you at most a transitory right to use the particular part of the stream where you happen to work. Abandon your spot and your dam will very soon be destroyed. Moreover, if you claim too much of the river for yourself, you can expect to be scorned, shamed, and sabotaged by others. This suggests to me that John Rawls’ difference principle might be a better descriptive theory of rights. The principle states that an unequal distribution of goods is justified only if it helps the least-well off. Dam builders respect the ‘big builders’ (and their uncles) only if they leave enough of the stream to others.

  2. Pingback: Economics on the beach II: the tragedy of the commons | Graz Economics Blog

  3. Pingback: Workshop on Game Theory and Modelling - Doctorado en Ciencias de la Complejidad Social UDD

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