Dynamic adaptation to resource scarcity and backstop availability: theory and application to groundwater
In this paper we analyse the optimal management of a renewable resource (groundwater) with stock-dependent extraction cost and a backstop substitute, facing two-sector linear demands. Application to the Kiti region in Cyprus demonstrates the model's performance and is used to test for the difference between optimal and myopic behaviour. It is found that the presence of a backstop resource diminishes the importance of optimal dynamic behaviour, whereas in the absence of backstop the optimal control solution yields a value for social welfare significantly larger than the myopic policy. Copyright Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Ltd 2006.
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Volume (Year): 50 (2006)
Issue (Month): 2 (06)
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- Phoebe Koundouri, 2004.
"Current Issues in the Economics of Groundwater Resource Management,"
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- Phoebe Koundouri, . "Current issues in the economics of groundwater resource management," DEOS Working Papers 0402, Athens University of Economics and Business.
- Koundouri, Phoebe, 2004. "Current issues in the economics of groundwater resource management," MPRA Paper 38425, University Library of Munich, Germany.
- Provencher Bill & Burt Oscar, 1993. "The Externalities Associated with the Common Property Exploitation of Groundwater," Journal of Environmental Economics and Management, Elsevier, vol. 24(2), pages 139-158, March.
- Koundouri, Phoebe, 2000. "Three approaches to measuring natural resource scarcity: theory and application to groundwater," MPRA Paper 38265, University Library of Munich, Germany.
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