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Regulating groundwater use in developing countries: a feasible instrument for public intervention

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  • Lars Gårn Hansen

    ()
    (Institute of Food and Resource Economics, University of Copenhagen)

  • Frank Jensen

    ()
    (Institute of Food and Resource Economics, University of Copenhagen)

  • Eirik S. Amundsen

    ()
    (Institute of Food and Resource Economics, University of Copenhagen)

Abstract

In many developing countries, groundwater is a common pool resource which is potentially subject to the tragedy of the commons if water extraction is not adequately regulated. However, in these countries, the regulatory infrastructure is often too weak to allow detailed monitoring of individual groundwater extraction. For this reason, classical public intervention instruments, such as consumption fees or tradable quotas, are infeasible. Here we present a theoretical foundation for a new public regulatory instrument that can potentially generate the same efficiency inducing incentives as fees and tradable quotas, but without their information and monitoring requirements. The instrument we propose is a tax based on aggregate extraction, rather than individual extraction measures.

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File URL: http://okonomi.foi.dk/workingpapers/WPpdf/WP2011/WP_2011_3_regulating_groundwater_use.pdf
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Bibliographic Info

Paper provided by University of Copenhagen, Department of Food and Resource Economics in its series IFRO Working Paper with number 2011/3.

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Length: 22 pages
Date of creation: Jan 2011
Date of revision:
Handle: RePEc:foi:wpaper:2011_3

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Web page: http://www.ifro.ku.dk/english/
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Keywords: Developing countries; groundwater use; moral hazard problems; taxes;

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  1. Segerson, Kathleen, 1988. "Uncertainty and incentives for nonpoint pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 15(1), pages 87-98, March.
  2. Hellegers, Petra J.G.J. & Zilberman, David & van Ierland, Ekko C., 2001. "Dynamics Of Agricultural Groundwater Extraction," 2001 Annual meeting, August 5-8, Chicago, IL, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 20446, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  3. Ambec, Stefan & Sprumont, Yves, 2000. "Sharing a River," Cahiers de recherche, GREEN 0006, GREEN.
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