Cooperative institutions for sustainable common pool resource management: Application to groundwater

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Abstract
Beneficiaries of common pool resources (CPRs) may select available noncooperative and regulatory exogenous institutions for managing the resource, as well as cooperative management institutions. All these institutions may increase the long‐term gains, prolong the life of the resource, and help to escape the tragedy of the commons trap. Cooperative game theory approaches can serve as the backbone of cooperative CPR management institutions. This paper formulates and applies several commonly used cooperative game theoretic solution concepts, namely, the core, Nash‐Harsanyi, Shapley, and nucleolus. Through a numerical groundwater example, we show how CPR users can share the gains obtained from cooperation in a fair and efficient manner based on these cooperative solution concepts (management institutions). Although, based on their fairness rationales, various cooperative management institutions may suggest different allocations that are potentially acceptable to the users, these allocation solutions may not be stable as some users may find them unfair. This paper discusses how different methods, such as application of the plurality rule and power index, stability index, and propensity to disrupt concepts, can help identify the most stable and likely solutions for enforcing cooperation among the CPR beneficiaries. Furthermore, how the noncooperative managerial characteristics of the CPR users can affect the stability and acceptability of the different cooperative CPR management institutions is discussed, providing valuable policy insights for cooperative CPR management at community levels.

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