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Groundwater Exploitation and Illegal Behaviors in a Differential Game

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  • Marta Biancardi

    (University of Bari)

  • Gianluca Iannucci

    (University of Firenze)

  • Giovanni Villani

    (University of Bari)

Abstract

This paper studies groundwater management through a leader–follower differential game between a water agency and farmers. The access to the common pool is not free and farmers have to pay a water tax to withdraw. To save this cost, we assume that farmers may not declare all the water pumped and face the risk of being sanctioned. The water agency, on the other hand, knows that unauthorized water extraction may occur and chooses the water tax that maximizes only the legal social welfare. The value of the farmers’ evasion share is unknown ex-ante by the water agency. The game is solved using feedback Nash solution. To understand how the water agency may counter illegal behaviors, we perform numerical simulations based on the Western La Mancha (Spain) aquifer data. It emerges that the optimal path of the water table is always above the minimum level, although it is sensitive to the level of the ecosystem costs. Moreover, increasing the administrative sanction reduces the unauthorized water extraction and raises the social welfare.

Suggested Citation

  • Marta Biancardi & Gianluca Iannucci & Giovanni Villani, 2022. "Groundwater Exploitation and Illegal Behaviors in a Differential Game," Dynamic Games and Applications, Springer, vol. 12(3), pages 996-1009, September.
    • Handle: RePEc:spr:dyngam:v:12:y:2022:i:3:d:10.1007_s13235-022-00436-0
    DOI: 10.1007/s13235-022-00436-0
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    References listed on IDEAS

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    13. Marta Biancardi & Lucia Maddalena & Giovanni Villani, 2020. "Groundwater extraction among overlapping generations: a differential game approach," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 43(2), pages 539-556, December.
    14. Jean-Christophe Pereau & Lauriane Mouysset & Luc Doyen, 2018. "Groundwater Management in a Food Security Context," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(2), pages 319-336, October.
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    Cited by:

    1. Andrea Caravaggio & Luigi De Cesare & Andrea Di Liddo, 2023. "A Differential Game for Optimal Water Price Management," Games, MDPI, vol. 14(2), pages 1-15, April.
    2. Florian Wagener, 2022. "Dynamic Games in Environmental Economics and Management," Dynamic Games and Applications, Springer, vol. 12(3), pages 747-750, September.
    3. Marta Biancardi & Gianluca Iannucci & Giovanni Villani, 2023. "Groundwater management and illegality in a differential-evolutionary framework," Computational Management Science, Springer, vol. 20(1), pages 1-17, December.

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