Managing Groundwater Quantity-Quality: Competitive Myopic Equilibrium Extraction, Competitive Extraction with Limited Foresight, and Optimal Extraction

Keith Willet () and Sanchari Gosh ()

No 1612, Economics Working Paper Series from Oklahoma State University, Department of Economics and Legal Studies in Business

Abstract: The purpose of this paper is to cast the groundwater quality-quantity problem in a joint resource management model structure that captures the spatial features of groundwater extraction and pollution. Groundwater use is developed under three types of common property extraction criteria namely- myopic extraction, extraction with limited foresight and optimal extraction. The analytical solutions under the three cases show that under optimal extraction, spatial externalities influence the use of water and fertilizer while for the myopic case the marginal decision rule is impacted by the pumping decisions of competitors spatially in previous time periods, and is not accompanied by any user cost for later periods. The diffuse nature of the resource has policy implications in terms of managing groundwater across space and over time given both quantity and quality considerations.

Pages: 21 pages
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:okl:wpaper:1612

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