Managing a common-pool resource with no stock externality: The case of artesian aquifers
Hubert Stahn and
No 1935, AMSE Working Papers from Aix-Marseille School of Economics, France
This paper studies a specific class of common-pool resources whereby rivalry is not characterized by competition for the resource stock. Artesian aquifers have been identified as a typical example, since the stock is never depleted, even when part of the resource is extracted. We first propose a dynamic model to account for relevant features of such aquifers-like water pressure, or well yield-and to characterize the corresponding dynamics. We then compare the social optimum and the private exploitation of an open-access aquifer. The comparison of these two equilibria allows us to highlight the existence of a new source of inefficiency. We refer to this as pressure externality. This externality results in the long run in an additional number of wells for the same water consumption, and hence additional costs. Finally, we characterize a specific stock-depend tax to neutralize the pressure externality.
Keywords: common-pool resource; externality; optimal management; public regulation; dynamic optimization (search for similar items in EconPapers)
JEL-codes: C61 H21 H23 Q15 Q25 (search for similar items in EconPapers)
Pages: 24 pages
New Economics Papers: this item is included in nep-env and nep-ore
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Working Paper: Managing a common-pool resource with no stock externality: The case of artesian aquifers (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:1935
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