Resource extraction and land-use choice in a two-player two-period game

Katrin Erdlenbruch (), Mabel Tidball () and Julia de Frutos Cachorro
Additional contact information
Katrin Erdlenbruch: CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier
Mabel Tidball: CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier
Julia de Frutos Cachorro: UB - Universitat de Barcelona

Working Papers from HAL

Abstract: Land use is an important driver for irrigation but rarely included in models of renewable resource economics. We set up a dynamic twoperiod model in which farmers decide on both land-use and water-use, while extracting from a common groundwater resource. We compute the Nash feedback equilibrium and the common property optimal solution, for symmetric and heterogeneous players. We first study the case where only water is a decision variable and then the case where water and land-use are decision variables, characterizing the intensive and extensive margins. We show that under Nash, in contrast to the optimal policy, more water is extracted than optimal, but more importantly, greater surfaces are irrigated and more water is extracted in the first period than in the second, showing the effect of strategic competition. We show in an example how regulating land-use may be a Pareto-improving policy and that not regulating it increases the difference between optimal and Nash gains, questionning the Gisser-Sanchez effect.

Date: 2025-02-18
Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-04954884v1
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hal.inrae.fr/hal-04954884v1/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-04954884

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().