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Pareto-Improving Water Management over Space and Time: The Honolulu Case

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  • Basharat A. Pitafi
  • James A. Roumasset

Abstract

We model welfare gains from efficient allocation of groundwater over space and time relative to the status quo policy of financial cost recovery. In order to promote political feasibility, an intertemporal compensation plan is devised that renders the reform Pareto-improving. Gainers from the reform finance the compensation in proportion to their benefits through a block-pricing scheme. For the Honolulu case, only 7% of the $441 million in gains to winners is needed to compensate losers from the reform. Future winners from the reform also repay the deficit created by the compensation package, much as state and local governments finance capital improvements. Copyright 2009, Oxford University Press.

Suggested Citation

  • Basharat A. Pitafi & James A. Roumasset, 2009. "Pareto-Improving Water Management over Space and Time: The Honolulu Case," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 138-153.
  • Handle: RePEc:oup:ajagec:v:91:y:2009:i:1:p:138-153
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2008.01186.x
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    1. repec:eee:foreco:v:29:y:2017:i:pa:p:47-55 is not listed on IDEAS
    2. James Roumasset & Christopher Wada, 2012. "The Economics of Groundwater," Working Papers 2012-4, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    3. James Roumasset & Christopher Wada, 2009. "Renewable Resource Management with Alternative Sources: the Case of Multiple Aquifers and a "Backstop" Resource," Working Papers 200913, University of Hawaii at Manoa, Department of Economics.
    4. Roumasset, James & Wada, Christopher A., 2013. "A dynamic approach to PES pricing and finance for interlinked ecosystem services: Watershed conservation and groundwater management," Ecological Economics, Elsevier, vol. 87(C), pages 24-33.
    5. James Roumasset & Christopher Wada, 2013. "Integrating Demand-Management with Development of Supply-Side Substitutes," Working Papers 2013-13, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    6. James Roumasset & Christopher Wada, 2009. "Integrated Management of the South Oahu Aquifer System: A Spatial and Temporal Approach," Working Papers 200902, University of Hawaii at Manoa, Department of Economics.
    7. Dionisios Latinopoulos & Eftichios S. Sartzetakis, 2015. "Using Tradable Water Permits in Irrigated Agriculture," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(3), pages 349-370, March.
    8. Kimberly Burnett & Christopher Wada, 2014. "Optimal groundwater management when recharge is declining: a method for valuing the recharge benefits of watershed conservation," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 16(3), pages 263-278, July.
    9. Roumasset James & Wada Christopher A, 2011. "Ordering Renewable Resources: Groundwater, Recycling, and Desalination," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-29, May.
    10. Roumasset, James A. & Wada, Christopher, 2013. "Energy Costs and the Optimal Use of Groundwater," 2014 Allied Social Science Association (ASSA) Annual Meeting, January 3-5, 2014, Philadelphia, PA 161892, Agricultural and Applied Economics Association.
    11. repec:hae:wpaper:2012-5 is not listed on IDEAS
    12. Pongkijvorasin, Sittidaj & Roumasset, James & Duarte, Thomas Kaeo & Burnett, Kimberly, 2010. "Renewable resource management with stock externalities: Coastal aquifers and submarine groundwater discharge," Resource and Energy Economics, Elsevier, vol. 32(3), pages 277-291, August.
    13. Ronald C. Griffin, 2012. "The Origins and Ideals of Water Resource Economics in the United States," Annual Review of Resource Economics, Annual Reviews, vol. 4(1), pages 353-377, August.
    14. James Roumasset & Christopher Wada, 2014. "Integrated Groundwater Resource Management," Working Papers 201414, University of Hawaii at Manoa, Department of Economics.
    15. Kimberly Burnett & Christopher Wada & Aiko Endo & Makoto Taniguchi, 2016. "The Economic Value of Groundwater in Obama," Working Papers 2016-8, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    16. repec:eee:ecomod:v:222:y:2011:i:9:p:1580-1591 is not listed on IDEAS
    17. Majah-Leah Ravago & James Roumasset, 2016. "The Public Economics of Electricity Policy with Philippine Applications," Working Papers 201613, University of Hawaii at Manoa, Department of Economics.
    18. James Roumasset & Christopher A. Wada, 2014. "Energy, Backstop Endogeneity, and the Optimal Use of Groundwater," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(5), pages 1363-1371.
    19. James Roumasset & Christopher Wada, 2013. "Ordering Extraction from Multiple Aquifers," Working Papers 2013-12, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    20. Roumasset, James A. & Wada, Christopher A., 2012. "Ordering the extraction of renewable resources: The case of multiple aquifers," Resource and Energy Economics, Elsevier, vol. 34(1), pages 112-128.
    21. James Roumasset & Christopher Wada, 2014. "Groundwater Economics without Equations," Working Papers 2014-8, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    22. James Roumasset & Christopher Wada, 2011. "Ordering Renewables: Groundwater, Recycling, and Desalination," Working Papers 201105, University of Hawaii at Manoa, Department of Economics.

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