Renewable Resource Management with Alternative Sources: the Case of Multiple Aquifers and a "Backstop" Resource
AbstractWhile renewable resource economics is typically confined to one source and one aggregate demand, resource managers must often decide how to manage multiple sources of a resource simultaneously. In addition, studies of extraction sequencing are typically confined to non-renewable resources. We propose a dynamic optimization model to determine the efficient allocation of groundwater when two coastal aquifers are available for exploitation. We find that Herfindahl’s least-cost-first result for nonrenewable resources does not necessarily apply to renewable resources, even when there is only one demand. Along the optimal trajectory extraction may switch from single to simultaneous use, depending on how the marginal opportunity cost of each resource evolves over time. A numerical simulation for the South Oahu aquifer system, which allows for differentiation of users by elevation and hence distribution costs, illustrates the switching behavior.
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Bibliographic InfoPaper provided by University of Hawaii at Manoa, Department of Economics in its series Working Papers with number 200913.
Length: 32 pages
Date of creation: 14 Oct 2009
Date of revision:
Find related papers by JEL classification:
- Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-10-31 (All new papers)
- NEP-ENE-2009-10-31 (Energy Economics)
- NEP-ENV-2009-10-31 (Environmental Economics)
- NEP-RES-2009-10-31 (Resource Economics)
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