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Groundwater management: The effect of water flows on welfare gains

Author

Listed:
  • Guilfoos, Todd
  • Pape, Andreas D.
  • Khanna, Neha
  • Salvage, Karen

Abstract

We construct a spatially explicit groundwater model that has multiple cells and finite hydraulic conductivity to estimate the gains from groundwater management and the factors driving those gains. We calibrate an 246-cell model to the parameters and geography of Kern County, California, and find that the welfare gain from management for the entire aquifer is significantly higher in the multi-cell model (27%) than in the bathtub model (13%) and that individual farmer gains can vary from 7% to 39% depending of their location and relative size of demand for water. We also find that when all farmers in the aquifer simultaneously behave strategically the aggregate gains from management are significantly smaller. However, individual farmers do not have the incentive to behave strategically even with finite hydraulic conductivity when other farmers behave myopically.

Suggested Citation

  • Guilfoos, Todd & Pape, Andreas D. & Khanna, Neha & Salvage, Karen, 2013. "Groundwater management: The effect of water flows on welfare gains," Ecological Economics, Elsevier, vol. 95(C), pages 31-40.
  • Handle: RePEc:eee:ecolec:v:95:y:2013:i:c:p:31-40
    DOI: 10.1016/j.ecolecon.2013.07.013
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    References listed on IDEAS

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    1. Saak, Alexander E. & Peterson, Jeffrey M., 2007. "Groundwater use under incomplete information," Journal of Environmental Economics and Management, Elsevier, vol. 54(2), pages 214-228, September.
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    3. Santiago Rubio & Begoña Casino, 2003. "Strategic Behavior and Efficiency in the Common Property Extraction of Groundwater," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(1), pages 73-87, September.
    4. Stergios Athanassoglou & Glenn Sheriff & Tobias Siegfried & Woonghee Huh, 2012. "Optimal Mechanisms for Heterogeneous Multi-Cell Aquifers," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 52(2), pages 265-291, June.
    5. Brozovic, Nicholas & Sunding, David L. & Zilberman, David, 2010. "On the spatial nature of the groundwater pumping externality," Resource and Energy Economics, Elsevier, vol. 32(2), pages 154-164, April.
    6. Kim, C. S. & Moore, Michael R. & Hanchar, John J. & Nieswiadomy, Michael, 1989. "A dynamic model of adaptation to resource depletion: theory and an application to groundwater mining," Journal of Environmental Economics and Management, Elsevier, vol. 17(1), pages 66-82, July.
    7. Pfeiffer, Lisa & Lin, C.-Y. Cynthia, 2012. "Groundwater pumping and spatial externalities in agriculture," Journal of Environmental Economics and Management, Elsevier, vol. 64(1), pages 16-30.
    8. Qiuqiong Huang & Jinxia Wang & Scott Rozelle & Stephen Polasky & Yang Liu, 2013. "The Effects of Well Management and the Nature of the Aquifer on Groundwater Resources," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(1), pages 94-116.
    9. Jordan F. Suter & Joshua M. Duke & Kent D. Messer & Holly A. Michael, 2012. "Behavior in a Spatially Explicit Groundwater Resource: Evidence from the Lab," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(5), pages 1094-1112.
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    11. Kun C. Lee & Cameron Short & Earl O. Heady, 1981. "Optimal Groundwater Mining in the Ogallala Aquifer: Estimation of Economic Losses and Excessive Depletion Due to Commonality," Center for Agricultural and Rural Development (CARD) Publications 81-wp1, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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    Cited by:

    1. Eric C. Edwards, 2016. "What Lies Beneath? Aquifer Heterogeneity and the Economics of Groundwater Management," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(2), pages 453-491.
    2. repec:eee:resene:v:51:y:2018:i:c:p:67-83 is not listed on IDEAS
    3. Steven M. Smith, 2017. "Economic Incentives and Conservation: Crowding-in Social Norms in a Groundwater Commons," Working Papers 2017-08, Colorado School of Mines, Division of Economics and Business.
    4. Collie, Samuel, 2015. "Accounting for well capacity in the economic decision making of groundwater users," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205783, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    5. Andrew B. Ayres & Eric C. Edwards & Gary D. Libecap, 2017. "How Transaction Costs Obstruct Collective Action: Evidence from California’s Groundwater," NBER Working Papers 23382, National Bureau of Economic Research, Inc.
    6. Hrozencik, Robert Aaron & Manning, Dale T., 2016. "Groundwater Management Policy Evaluation with a Spatial-Dynamic Hydro-Economic Modelling Framework," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 236116, Agricultural and Applied Economics Association.

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