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Optimal Groundwater Extraction under the Linear Response and Plateau Technology

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  • Wang, Chenggang
  • Segarra, Eduardo

Abstract

This paper studies the optimal management of groundwater resources when agronomic and hydrologic constraints bind the use of groundwater for irrigation. The binding constraints lead to a perfectly inelastic demand for groundwater. In the case of symmetric agents the social and private rates of groundwater extraction coincide with one another and commonality is completely innocuous; in the case of asymmetric agents the rate of extraction remains the same in the social and private setting, yet irrigation is abandoned by the same agent at different times. The model offers one way to rationalize the empirically found peculiarities of sticky water demand and Gisser-Sanchez Effect which defy conventional theory. The situations described in the model also challenge conventional corrective measures for management of groundwater as a common property resource. Policy recommendations are provided.

Suggested Citation

  • Wang, Chenggang & Segarra, Eduardo, 2009. "Optimal Groundwater Extraction under the Linear Response and Plateau Technology," 2009 Conference, August 16-22, 2009, Beijing, China 51432, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae09:51432
    DOI: 10.22004/ag.econ.51432
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    File URL: https://ageconsearch.umn.edu/record/51432/files/2009%20IAAE%20488.pdf
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    References listed on IDEAS

    as
    1. Richard L. Gardner & Robert A. Young, 1984. "The Effects of Electricity Rates and Rate Structures on Pump Irrigation: An Eastern Colorado Case Study," Land Economics, University of Wisconsin Press, vol. 60(4), pages 352-359.
    2. Berbel, J. & Gomez-Limon, J. A., 2000. "The impact of water-pricing policy in Spain: an analysis of three irrigated areas," Agricultural Water Management, Elsevier, vol. 43(2), pages 219-238, March.
    3. 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.
    4. Lee, Kun C. & Short, Cameron & Heady, Earl O., 1981. "Optimal Groundwater Mining In The Ogallala Aquifer: Estimation Of Economic Losses And Excessive Depletion Due To Commonality," 1981 Annual Meeting, July 26-29, Clemson, South Carolina 279261, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    Keywords

    Resource /Energy Economics and Policy;

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