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The Dynamic Impact of Technical Progress on Common-pool Groundwater Use and Depletion

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  • Quintana-Ashwell, Nicolas E.
  • Peterson, Jeffrey M.

Abstract

A class of dynamic models is developed to assess potential gains from management of groundwater in arid and semi-arid regions in the presence of technical change. The aquifer is a common-pool resource (CPR) because users typically hold the right to pump groundwater but do not own the water contained in the aquifer and since groundwater is a fugitive resource, the stock available to an irrigator depends dynamically on the levels of extraction by neighboring irrigators. Allocations result from profit maximizing behavior of irrigating farmers. Competitive outcomes are obtained from periodic profit maximization while planning, or management, outcomes result from maximization of the net present value of the stream of profits over the lifetime of the aquifer. The divergence between these two outcomes over time indicates the magnitude of the common-pool resource externality. Dynamical systems govern the evolution of the aquifer, the climate, and the rate of technical progress. These dynamical systems may be dependent upon periodic allocations, as in the case of the aquifer, or independent of the periodic allocations, as in the case of precipitation. A simplified example of the model incorporating only deterministic aquifer and technical change dynamics is presented as a linear-quadratic optimal control problem.

Suggested Citation

  • Quintana-Ashwell, Nicolas E. & Peterson, Jeffrey M., 2014. "The Dynamic Impact of Technical Progress on Common-pool Groundwater Use and Depletion," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196891, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saea15:196891
    DOI: 10.22004/ag.econ.196891
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    References listed on IDEAS

    as
    1. Hendricks, Nathan P. & Peterson, Jeffrey M., 2012. "Fixed Effects Estimation of the Intensive and Extensive Margins of Irrigation Water Demand," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(1), pages 1-19, April.
    2. Jeffrey M. Peterson & Ya Ding, 2005. "Economic Adjustments to Groundwater Depletion in the High Plains: Do Water-Saving Irrigation Systems Save Water?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 147-159.
    3. Nicolas E. Quintana Ashwell & Jeffrey M. Peterson, 2016. "The Impact of Irrigation Capital Subsidies on Common-Pool Groundwater Use and Depletion: Results for Western Kansas," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(03), pages 1-22, September.
    4. Ding, Ya & Peterson, Jeffrey M., 2012. "Comparing the Cost-Effectiveness of Water Conservation Policies in a Depleting Aquifer: A Dynamic Analysis of the Kansas High Plains," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 44(2), pages 1-12, May.
    5. Margriet Caswell & David Zilberman, 1985. "The Choices of Irrigation Technologies in California," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(2), pages 224-234.
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    7. Bernardo, Daniel J. & Whittlesey, Norman K. & Saxton, Keith E. & Bassett, Day L., 1987. "An Irrigation Model For Management Of Limited Water Supplies," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 12(2), pages 1-10, December.
    8. Morton I. Kamien & Nancy L. Schwartz, 1978. "Optimal Exhaustible Resource Depletion with Endogenous Technical Change," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 45(1), pages 179-196.
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    10. Wang, Chenggang & Segarra, Eduardo, 2011. "The Economics of Commonly Owned Groundwater When User Demand Is Perfectly Inelastic," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 36(1), pages 1-26, April.
    11. repec:ags:jrapmc:122312 is not listed on IDEAS
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    1. Quintana-Ashwell, Nicolas E. & Peterson, Jeffrey M., 2015. "Aquifer Depletion in the face of Climate Change and Technical Progress," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205882, Agricultural and Applied Economics Association.

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