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Out of sight, not out of mind: developments in economic models of groundwater management

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  • Phoebe Koundouri
  • Catarina Roseta-Palma

    ()

  • Nikolaos Englezos

    ()

Abstract

Dynamic models of natural resource management have been applied to groundwater for decades, incorporating at least two inescapable aspects: first, since groundwater stocks are carried over to future periods, dynamic analysis is essential and any costs and benefits included in the analysis will require discounting; second, the positive and normative aspects of management must be clarified at the outset. The difference is fundamental even if the results of the two model types sometimes turn out to be fairly close. A whole strand of literature has been preoccupied with the question of whether policy interventions at least have the potential of improving groundwater management in a meaningful sense. However, given the well-documented parlous state of many aquifers around the world today, the focus has mostly shifted from debating whether or not intervention is worthwhile to identifying the relevant features of complex groundwater systems, designing better policies and facilitating their successful implementation. We survey developments in economic models relevant to groundwater management, focusing especially on the depiction of uncertainty and on the different methods applied to estimate the total economic value of groundwater.
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Suggested Citation

  • Phoebe Koundouri & Catarina Roseta-Palma & Nikolaos Englezos, 2017. "Out of sight, not out of mind: developments in economic models of groundwater management," DEOS Working Papers 1704, Athens University of Economics and Business.
  • Handle: RePEc:aue:wpaper:1704
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    File URL: http://wpa.deos.aueb.gr/docs/2017.August.IRERE.GW_Revised.pdf
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    References listed on IDEAS

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    1. Brozovic, Nicholas & Schlenker, Wolfram, 2011. "Optimal management of an ecosystem with an unknown threshold," Ecological Economics, Elsevier, vol. 70(4), pages 627-640, February.
    2. Roy Brouwer & Julia Martin-Ortega & RJulio Berbel, 2010. "Spatial Preference Heterogeneity: A Choice Experiment," Land Economics, University of Wisconsin Press, vol. 86(3).
    3. Brozovic, Nicholas & Islam, Shahnila, 2010. "Estimating the Value of Groundwater in Irrigation," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61337, Agricultural and Applied Economics Association.
    4. Arrow, K. & Cropper, M. & Gollier, C. & Groom, B. & Heal, G. & Newell, R. & Nordhaus, W. & Pindyck, R. & Pizer, W. & Portney, P. & Sterner, T. & Tol, R. S. J. & Weitzman, Martin L., 2013. "Determining Benefits and Costs for Future Generations," Scholarly Articles 12841963, Harvard University Department of Economics.
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    Cited by:

    1. 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.
    2. 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.

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    More about this item

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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