Social capital as an instrument for common pool resource management: a case study of irrigation management in Sri Lanka

Abstract

Abstract Although social capital is considered to be a key instrument for common pool resource (CPR) management, its effect among heterogenous players such as upstream and downstream farmers along an irrigation canal is not clear. Using a combination of lab-in-the-field experiments to measure social capital and household survey data in a unique natural experimental setting, this study shows that upstream farmers with higher trust toward the downstream farmers are more likely to be satisfied with their water usage. This finding is consistent with the hypothesis that upstream farmers with higher trust demand less water and leave more water in a canal because they expect reciprocal behaviour from downstream farmers. Since the incentive structures of irrigation management closely resemble those of the standard experiments to measure social capital, this finding also provides a unique case study of the real-world relevance of these experiments.