Experimental Social Science Laboratory (Xlab)

Abstract. The Metropolitan Water District of Southern California (MET) is a self-regulated, public cooperative that imports the majority of Southern California's water. MET delivers this water to its 26 member agencies through MET infrastructure. MET's members--through its Board of Directors--decide the price of water and allocation of infrastructure costs by majority vote. Although MET's self-regulated cooperative status was an efficient organizational form in the past, changing circumstances (reduced supply, increased demand)have made it less so. The response of MET and its member agencies--conflict over decisions and enactment of policies supported by the median-voter--does not deliver economic or political efficiency. MET could use internal auction markets to allocate water and costs more efficiently and equitably.