Production Externalities and the Gains from Management in a Spatially-Explicit Aquifer

Dale Manning and Jordan Suter

Journal of Agricultural and Resource Economics, 2019, vol. 44, issue 01

Abstract: Groundwater is a valuable input to agricultural production in many areas, but its use imposes external costs on nearby producers. Little attention has been given to externalities that directly affect groundwater productivity. We develop a dynamic, spatially-explicit model of groundwater use that allows changes in saturated thickness to affect both the pumping cost and productivity of nearby wells.We compare gains from coordinated, socially optimal groundwater use to those that result from a user pursuing unilateral optimization. For wells with average saturated thickness, both unilateral and coordinated optimization can moderately increase the net present value of resource rents.

Keywords: Agricultural and Food Policy; Crop Production/Industries; Environmental Economics and Policy; Production Economics (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:jlaare:281320

DOI: 10.22004/ag.econ.281320

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