It is an article of faith among economists that a resource without a private property regime is destined for overuse. Yet on Bali, an island in the Indonesian archipelago, that is not the case. For centuries rice farmers there have coordinated their use of scarce water through social networks built on the innate human capacity to manage such resources in a cooperative manner.1
The system is based on what anthropologists have called “water temples,” which enfold the water sharing within a context of traditional Balinese religion. But actually the networks function through a form of bottom- up cooperation in which the temples provide a venue through which producers can coordinate their water use. Modern computer analysis has found that the resulting allocation is close to ideal in terms of the productivity of the farms. It defeats pests naturally and uses the available water to maximum effect.2