Abstract
This chapter explains the puzzling fact that in organizing the management of surface water, village leaders have provided incentives to canal managers in some areas, but not in all. The model of contractual choices employed predicts that the optimal contractual choice depends on the relative abilities of the leader and the manager, the design of the cultivated land, the characteristics of the canal system, and the opportunity costs of the leader and the pool of managerial candidates. The unifying mechanism is the relative change in the ability of the leader and manager to perform the unmarketable activities that are needed to provide irrigation services. Empirical analysis supports predictions made from the model and identifies a set of factors influencing contractual choice including the nature of its cultivated land, the design of its canal system, and the characteristics of the leader and the pool of managerial candidates.
Published Version
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