Sinking Land: Optimal Control of Subsidence

Suphi Sen, Dewy Verhoeven and Hans-Peter Weikard

No 10683, CESifo Working Paper Series from CESifo

Abstract: Land subsidence threatens the living conditions of about 1.2 billion people world-wide in deltaic regions characterized by soft top soil. Economic activity in these areas requires lowering groundwater levels to keep the land sufficiently dry, which leaves future generations worse off by accelerating subsidence and increasing future costs. This paper provides a model that recognizes this trade-off and yields analytical expressions for the groundwater level paths that optimally manage the dynamics of land subsidence. Applying our model to the paradigm case of Dutch agricultural peatlands, we find that accounting for dynamic efficiency increases welfare by more than 2.5 percent compared to a myopic policy benchmark, and these gains can be about 10 percent within reasonable parameter ranges. Our results support current proposals to reduce subsidence, even without considering additional social benefits from avoided carbon dioxide emissions.

Keywords: land subsidence; agricultural production; intertemporal trade-offs; optimal control (search for similar items in EconPapers)
JEL-codes: C61 Q15 Q24 Q25 Q50 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-agr and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_10683

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