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Ordering Renewable Resources: Groundwater, Recycling, and Desalination

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  • Roumasset James

    ()
    (University of Hawaii at Manoa)

  • Wada Christopher A

    ()
    (University of Hawaii at Manoa)

Abstract

Optimal recycling of minerals can be thought of as an integral part of the theory of the mine. In this paper, we consider the role that wastewater recycling plays in the optimal extraction of groundwater, a renewable resource. We develop a two-sector dynamic optimization model to solve for the optimal trajectories of groundwater extraction and water recycling. For the case of spatially increasing recycling costs, recycled water serves as a supplemental resource in transition to the steady state. For constant unit recycling cost, recycled wastewater is eventually used as a sector-specific backstop for agricultural users, while desalination supplements household groundwater in the steady state. In both cases, recycling water increases welfare by shifting demand away from the aquifer, thus delaying implementation of costly desalination. The model provides guidance on when and how much to develop resource alternatives.

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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 11 (2011)
Issue (Month): 1 (May)
Pages: 1-29

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Handle: RePEc:bpj:bejeap:v:11:y:2011:i:1:n:28

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  1. Klaus Conrad, 1999. "Resource and Waste Taxation in the Theory of the Firm with Recycling Activities," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 14(2), pages 217-242, September.
  2. Chakravorty, Ujjayant & Krulce, Darrell L, 1994. "Heterogeneous Demand and Order of Resource Extraction," Econometrica, Econometric Society, Econometric Society, vol. 62(6), pages 1445-52, November.
  3. Naomi Zeitouni & Ariel Dinar, 1997. "Mitigating negative water quality and quality externalities by joint mangement of adjacent aquifers," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 9(1), pages 1-20, January.
  4. Chakravorty, Ujjayant & Roumasset, James & Tse, Kinping, 1997. "Endogenous Substitution among Energy Resources and Global Warming," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 105(6), pages 1201-34, December.
  5. Ujjayant Chakravorty & Darrell Krulce & James Roumasset, 2003. "Specialization and Nonrenewable Resources: Ricardo Meets Ricardo," Emory Economics, Department of Economics, Emory University (Atlanta) 0305, Department of Economics, Emory University (Atlanta).
  6. Costello, Christopher & Polasky, Stephen, 2008. "Optimal harvesting of stochastic spatial resources," Journal of Environmental Economics and Management, Elsevier, vol. 56(1), pages 1-18, July.
  7. Stavins, Robert & Wagner, Alexander & Wagner, Gernot, 2002. "Interpreting Sustainability in Economic Terms: Dynamic Efficiency Plus Intergenerational Equity," Discussion Papers, Resources For the Future dp-02-29, Resources For the Future.
  8. Pitafi, Basharat A.K. & Roumasset, James A., 2004. "Pareto-Improving Water Management Over Space And Time," 2004 Annual meeting, August 1-4, Denver, CO, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 20022, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  9. Ujjayant Chakravorty & Michel Moreaux & Mabel Tidball, 2008. "Ordering the Extraction of Polluting Nonrenewable Resources," American Economic Review, American Economic Association, American Economic Association, vol. 98(3), pages 1128-44, June.
  10. Phoebe Koundouri & Christina Christou, 2006. "Dynamic adaptation to resource scarcity and backstop availability: theory and application to groundwater ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(2), pages 227-245, 06.
  11. Gerard Gaudet & Michel Moreaux & Stephen W. Salant, 2001. "Intertemporal Depletion of Resource Sites by Spatially Distributed Users," American Economic Review, American Economic Association, American Economic Association, vol. 91(4), pages 1149-1159, September.
  12. Koundouri, Phoebe & Christou, Christina, 2006. "Dynamic adaptation to resource scarcity and backstop availability: theory and application to groundwater," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, Australian Agricultural and Resource Economics Society, vol. 50(2), June.
  13. Thomas Kaeo Duarte & Sittidaj Pongkijvorasi & James Roumasset & Daniel Amato & Kimberly Burnett, 2010. "Optimal Management of a Hawaiian Coastal Aquifer with Near-Shore Marine Ecological Interactions," Working Papers, University of Hawaii at Manoa, Department of Economics 201021, University of Hawaii at Manoa, Department of Economics.
  14. Chakravorty, Ujjayant & Umetsu, Chieko, 2003. "Basinwide water management: a spatial model," Journal of Environmental Economics and Management, Elsevier, vol. 45(1), pages 1-23, January.
  15. Darrell Krulce & James A. Roumasset & Tom Wilson, 1997. "Optimal Management of a Renewable and Replaceable Resource: The Case of Coastal Groundwater," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 79(4), pages 1218-1228.
  16. Basharat A. Pitafi & James A. Roumasset, 2009. "Pareto-Improving Water Management over Space and Time: The Honolulu Case," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 91(1), pages 138-153.
  17. Brozovic, Nicholas & Sunding, David L. & Zilberman, David, 2006. "On the spatial nature of the groundwater pumping externality," 2006 Annual meeting, July 23-26, Long Beach, CA, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 21035, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  18. Huhtala, Anni, 1999. "Optimizing production technology choices: conventional production vs. recycling," Resource and Energy Economics, Elsevier, Elsevier, vol. 21(1), pages 1-18, January.
  19. Majah-Leah Ravago & James Roumasset, 2009. "Economic Policy for Sustainable Growth and Development vs. Greedy Growth and Preservationism," Working Papers, University of Hawaii at Manoa, Department of Economics 200909, University of Hawaii at Manoa, Department of Economics.
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Citations

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Cited by:
  1. James Roumasset & Christopher Wada, 2013. "Integrating Demand-Management with Development of Supply-Side Substitutes," Working Papers, University of Hawaii Economic Research Organization, University of Hawaii at Manoa 2013-13, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
  2. James Roumasset & Christopher Wada, 2014. "Integrated Groundwater Resource Management," Working Papers, University of Hawaii at Manoa, Department of Economics 201414, University of Hawaii at Manoa, Department of Economics.
  3. James Roumasset & Christopher Wada, 2012. "The Economics of Groundwater," Working Papers, University of Hawaii at Manoa, Department of Economics 201211, University of Hawaii at Manoa, Department of Economics.
  4. Karl Jandoc & Ruben Juarez & James Roumasset, 2014. "Towards an Economics of Irrigation Networks," Working Papers, University of Hawaii at Manoa, Department of Economics 201416, University of Hawaii at Manoa, Department of Economics.

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