Private water supply systems consisting of a domestic well and septic system are used throughout the world where households lack access to public water supply and sewers. In residential areas with high housing density, septic contamination of private wells is common and associated with multiple health concerns. This situation can give rise to social dilemmas, where individual costs dis-incentivize homeowners from investing in enhanced septic systems that would reduce well contamination and bring communal benefits. We combine a stylized game-theoretical model with a probabilistic groundwater model to characterize how economic and hydrogeological conditions interact to produce misaligned incentives conducive to social dilemmas. The occurrence of social dilemmas depends on the relative costs of well contamination versus the cost of installing an enhanced septic treatment system, and the relative probabilities of cross-contamination versus self-contamination. The game reveals three three types of social dilemmas that occur in such systems, with each calling for distinct policy solutions. We demonstrate how the model can be applied to existing systems using a case study of St Joseph County, Indiana, where high nitrate contamination rates have raised public health concerns. This analysis represents a step towards identifying alternative policy solutions for a problem that has remained difficult to address for decades.
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