The Kabu-ido System: Implications for Current Groundwater Management Policy

The Kabu-ido system was a customary groundwater management practice that was once used in the southern part of Noubi Plain in the Tokai area of Japan. The system had two features: limitation of the total number of wells and groundwater users’ obligation to pay economic compensation. From the theoretical point of view, it is an example of the Coase theorem, because it can be regarded as an institution by which the stakeholders internalized negative externalities caused by groundwater pumping through private negotiations. Although the Kabu-ido system is not used any more, it still contains implications for current groundwater management policy including the importance of third-party monitoring, usefulness of issue linkage in the process of conflict management, effectiveness of economic tools on the use of groundwater pumping restrictions, and significance of an ear-marked tax.