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Strategic Behavior and Efficiency in the Common Property Extraction of Groundwater

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  • Santiago Rubio

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  • Begoña Casino

Abstract

Externalities that arise from privateexploitation of groundwater are analyzed by comparing socially optimal and privateextraction. Open-loop Nashequilibrium and stationary Markov feedbackequilibrium in nonlinear strategieshave been computed to characterize privateextraction. The use of thesetwo equilibrium concepts allows us todistinguish between cost andstrategic externalities as long as the open-loop solutioncaptures only the cost externality, and the feedback solution capturesboth. The results show thatstrategic behavior increases theoverexploitation of the aquifer. However, ifthe groundwater storage capacity is large, thedifference between the sociallyoptimal and private extraction is negligible. Copyright Kluwer Academic Publishers 2003

Suggested Citation

  • 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.
  • Handle: RePEc:kap:enreec:v:26:y:2003:i:1:p:73-87 DOI: 10.1023/A:1025637705488
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    References listed on IDEAS

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    Cited by:

    1. Catarina Roseta-Palma, 2003. "Joint Quantity/Quality Management of Groundwater," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(1), pages 89-106, September.
    2. 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.
    3. Alain Ayong Le Kama & Agnès Tomini, 2012. "Water Conservation versus Soil Salinity Control," EconomiX Working Papers 2012-8, University of Paris Nanterre, EconomiX.
    4. Raphaël Soubeyran & Mabel Tidball & Agnes Tomini & Katrin Erdlenbruch, 2015. "Rainwater Harvesting and Groundwater Conservation: When Endogenous Heterogeneity Matters," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(1), pages 19-34, September.
    5. Strand, Jon, 2010. "The full economic cost of groundwater extraction," Policy Research Working Paper Series 5494, The World Bank.
    6. Pamela Katic, 2015. "Groundwater Spatial Dynamics and Endogenous Well Location," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 29(1), pages 181-196, January.
    7. Rubio, Santiago J. & Casino, Begona, 2002. "A note on cooperative versus non-cooperative strategies in international pollution control," Resource and Energy Economics, Elsevier, vol. 24(3), pages 251-261, June.
    8. Stergios Athanassoglou & Glenn Sheriff & Tobias Siegfried & Woonghee Tim Huh, 2009. "Simple Mechanisms for Managing Complex Aquifers," NCEE Working Paper Series 200905, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Oct 2009.
    9. 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.
    10. Hubert Stahn & Agnès Tomini, 2015. "Rainwater Harvesting under Endogenous Capacity of Storage : a Solution to Aquifer Preservation," Annals of Economics and Statistics, GENES, issue 119-120, pages 209-234.
    11. Katrin Erdlenbruch & Raphael Soubeyran & Mabel Tidball & Agnes Tomini, 2012. "(Anti-)Coordination Problems with Scarce Water Resources," Working Papers 12-28, LAMETA, Universtiy of Montpellier, revised Sep 2012.
    12. Isik, Murat, 2005. "The Role of Land Retirement Programs for Management of Water Resources," 2005 Annual meeting, July 24-27, Providence, RI 19542, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Du Bois, Rodrigo Salcedo & Macias, Miguel Angel Gutierrez, 2013. "Cooperation makes it happen? Groundwater management in Aguascalientes, Mexico: An experimental approach," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151139, Agricultural and Applied Economics Association.
    14. Msangi, Siwa, 2005. "Measuring the Gains to Groundwater Management with Recursive Utility," 2005 Annual meeting, July 24-27, Providence, RI 19212, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. 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.
    16. Phoebe Koundouri, 2004. "Current Issues in the Economics of Groundwater Resource Management," Journal of Economic Surveys, Wiley Blackwell, vol. 18(5), pages 703-740, December.
    17. Shanxia Sun & Juan P. Sesmero & Karina Schoengold, 2016. "The role of common pool problems in irrigation inefficiency: a case study in groundwater pumping in Mexico," Agricultural Economics, International Association of Agricultural Economists, vol. 47(1), pages 117-127, January.
    18. Kim, C.S. & Fuglie, Keith O. & Wallander, Steve & Wechsler, Seth, 2015. "Endogenous Technical Change and Groundwater Management: Revisiting the Gisser-Sanchez Paradox," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205350, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    19. Mehran Homayounfar & Sai Lai & Mehdi Zommorodian & Amin Oroji & Arman Ganji & Sara Kaviani, 2015. "Developing a Non-Discrete Dynamic Game Model and Corresponding Monthly Collocation Solution Considering Variability in Reservoir Inflow," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 29(8), pages 2599-2618, June.
    20. Erik Ansink & Harold Houba, 2014. "The Economics of Transboundary River Management," Tinbergen Institute Discussion Papers 14-132/VIII, Tinbergen Institute.

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