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Groundwater management: The effect of water flows on welfare gains

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  • 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.

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  • 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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    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. Ayres, Andrew B. & Edwards, Eric C. & Libecap, Gary D., 2018. "How transaction costs obstruct collective action: The case of California's groundwater," Journal of Environmental Economics and Management, Elsevier, vol. 91(C), pages 46-65.
    3. Quintana Ashwell, Nicolas E. & Peterson, Jeffrey M. & Hendricks, Nathan P., 2018. "Optimal groundwater management under climate change and technical progress," Resource and Energy Economics, Elsevier, vol. 51(C), pages 67-83.
    4. Drysdale, Krystal M. & Hendricks, Nathan P., 2018. "Adaptation to an irrigation water restriction imposed through local governance," Journal of Environmental Economics and Management, Elsevier, vol. 91(C), pages 150-165.
    5. Rouhi Rad, Mani & Brozović, Nicholas & Foster, Timothy & Mieno, Taro, 2020. "Effects of instantaneous groundwater availability on irrigated agriculture and implications for aquifer management," Resource and Energy Economics, Elsevier, vol. 59(C).
    6. 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.
    7. 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.
    8. Pereau, Jean-Christophe & Pryet, Alexandre & Rambonilaza, Tina, 2019. "Optimality Versus Viability in Groundwater Management with Environmental Flows," Ecological Economics, Elsevier, vol. 161(C), pages 109-120.
    9. Kovacs, Kent & Durand-Morat, Alvaro, 2020. "Lateral flows in an aquifer and groundwater valuation," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304219, Agricultural and Applied Economics Association.
    10. Amine Chekireb & Julio Goncalves & Hubert Stahn & Agnes Tomini, 2021. "Private exploitation of the North-Western Sahara Aquifer System," AMSE Working Papers 2144, Aix-Marseille School of Economics, France.
    11. Eric C. Edwards & Todd Guilfoos, 2021. "The Economics of Groundwater Governance Institutions across the Globe," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(4), pages 1571-1594, December.
    12. Sayre, Susan Stratton & Taraz, Vis, 2019. "Groundwater depletion in India: Social losses from costly well deepening," Journal of Environmental Economics and Management, Elsevier, vol. 93(C), pages 85-100.
    13. Guilfoos, Todd & Garnache, Cloe & Suter, Jordan F. & Merrill, Nathaniel H., 2017. "Efficiency Gains Arising from Dynamic Groundwater Markets," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258438, Agricultural and Applied Economics Association.
    14. Nathaniel H Merrill & Todd Guilfoos, 2018. "Optimal Groundwater Extraction under Uncertainty and a Spatial Stock Externality," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(1), pages 220-238.
    15. Kovacs, Kent & Durand-Morat, Alvaro, 2018. "Optimal Groundwater Management in Response to the Intensity of Lateral Flows," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 267164, Southern Agricultural Economics Association.
    16. Smith, Steven M., 2018. "Economic incentives and conservation: Crowding-in social norms in a groundwater commons," Journal of Environmental Economics and Management, Elsevier, vol. 90(C), pages 147-174.
    17. Athanasios Tsiarapas & Zisis Mallios, 2023. "Estimating the long-term impact of market power on the welfare gains from groundwater markets," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(3), pages 377-406, July.
    18. Manning, Dale T. & Rad, Mani Rouhi & Suter, Jordan F. & Goemans, Christopher & Xiang, Zaichen & Bailey, Ryan, 2020. "Non-market valuation in integrated assessment modeling: The benefits of water right retirement," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    19. Sloggy, Matthew R. & Manning, Dale, 2020. "Natural Insurance and Weak Substitutability: Using Insurance Markets to Value Groundwater Stocks in Kansas," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304575, Agricultural and Applied Economics Association.
    20. 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, Boston, Massachusetts 236116, Agricultural and Applied Economics Association.

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