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Sequencing Renewables: Groundwater, Recycled Water, and Desalination

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  • Roumasset, James A.
  • Wada, Christopher

Abstract

Optimal recycling of minerals can be thought of as an integral part of the theory of the mine. In this paper, we consider the role that wastewater recycling plays in the optimal extraction of groundwater, a renewable resource. We develop a two-sector dynamic optimization model to solve for the optimal trajectories of groundwater extraction and water recycling. For the case of spatially increasing recycling costs, recycled water serves as a supplemental resource in transition to the steady state. For constant unit recycling cost, recycled wastewater is eventually used as a sector-specific backstop for agricultural users, while desalination supplements household groundwater in the steady state. In both cases, recycling water increases welfare by shifting demand away from the aquifer, thus delaying implementation of costly desalination. The model provides guidance on when and how much to develop resource alternatives.

Suggested Citation

  • Roumasset, James A. & Wada, Christopher, 2011. "Sequencing Renewables: Groundwater, Recycled Water, and Desalination," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103753, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea11:103753
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    References listed on IDEAS

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    1. Phoebe Koundouri & Christina Christou, 2006. "Dynamic adaptation to resource scarcity and backstop availability: theory and application to groundwater ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(2), pages 227-245, June.
    2. Vernon L. Smith, 1972. "Dynamics of Waste Accumulation: Disposal versus Recycling," The Quarterly Journal of Economics, Oxford University Press, vol. 86(4), pages 600-616.
    3. Ujjayant Chakravorty & Michel Moreaux & Mabel Tidball, 2008. "Ordering the Extraction of Polluting Nonrenewable Resources," American Economic Review, American Economic Association, vol. 98(3), pages 1128-1144, June.
    4. Stavins, Robert N. & Wagner, Alexander F. & Wagner, Gernot, 2003. "Interpreting sustainability in economic terms: dynamic efficiency plus intergenerational equity," Economics Letters, Elsevier, vol. 79(3), pages 339-343, June.
    5. Chakravorty, Ujjayant & Krulce, Darrell & Roumasset, James, 2005. "Specialization and non-renewable resources: Ricardo meets Ricardo," Journal of Economic Dynamics and Control, Elsevier, vol. 29(9), pages 1517-1545, September.
    6. Darrell Krulce & James A. Roumasset & Tom Wilson, 1997. "Optimal Management of a Renewable and Replaceable Resource: The Case of Coastal Groundwater," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1218-1228.
    7. Chakravorty, Ujjayant & Krulce, Darrell L, 1994. "Heterogeneous Demand and Order of Resource Extraction," Econometrica, Econometric Society, vol. 62(6), pages 1445-1452, November.
    8. Costello, Christopher & Polasky, Stephen, 2008. "Optimal harvesting of stochastic spatial resources," Journal of Environmental Economics and Management, Elsevier, vol. 56(1), pages 1-18, July.
    9. Francisco André & Emilio Cerdá, 2006. "On the Dynamics of Recycling and Natural Resources," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 33(2), pages 199-221, February.
    10. Huhtala, Anni, 1999. "Optimizing production technology choices: conventional production vs. recycling," Resource and Energy Economics, Elsevier, vol. 21(1), pages 1-18, January.
    11. Milton C. Weinstein & Richard J. Zeckhauser, 1974. "Use Patterns for Depletable and Recycleable Resources," Review of Economic Studies, Oxford University Press, vol. 41(5), pages 67-88.
    12. Chakravorty, Ujjayant & Roumasset, James & Tse, Kinping, 1997. "Endogenous Substitution among Energy Resources and Global Warming," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1201-1234, December.
    13. Chakravorty, Ujjayant & Umetsu, Chieko, 2003. "Basinwide water management: a spatial model," Journal of Environmental Economics and Management, Elsevier, vol. 45(1), pages 1-23, January.
    14. 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.
    15. Gerard Gaudet & Michel Moreaux & Stephen W. Salant, 2001. "Intertemporal Depletion of Resource Sites by Spatially Distributed Users," American Economic Review, American Economic Association, vol. 91(4), pages 1149-1159, September.
    16. Majah-Leah Ravago & James Roumasset, 2009. "Economic Policy for Sustainable Growth and Development vs. Greedy Growth and Preservationism," Working Papers 200909, University of Hawaii at Manoa, Department of Economics.
    17. 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.
    18. Klaus Conrad, 1999. "Resource and Waste Taxation in the Theory of the Firm with Recycling Activities," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 14(2), pages 217-242, September.
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    Cited by:

    1. James Roumasset & Christopher Wada, 2012. "The Economics of Groundwater," Working Papers 2012-4, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    2. 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.
    3. repec:eee:resene:v:49:y:2017:i:c:p:186-200 is not listed on IDEAS
    4. Karl Jandoc & Ruben Juarez & James Roumasset, 2014. "Towards an Economics of Irrigation Networks," Working Papers 201416, University of Hawaii at Manoa, Department of Economics.
    5. James Roumasset & Christopher Wada, 2014. "Integrated Groundwater Resource Management," Working Papers 201414, University of Hawaii at Manoa, Department of Economics.
    6. James Roumasset & Christopher Wada, 2014. "Groundwater Economics without Equations," Working Papers 2014-8, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.

    More about this item

    Keywords

    Renewable resources; dynamic optimization; groundwater allocation; wastewater reuse; recycling; reclamation; water quality; Environmental Economics and Policy; Resource /Energy Economics and Policy; Q25; Q28; C6;

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling

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