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Sinking Land: Optimal Control of Subsidence

Author

Listed:
  • Suphi Sen
  • Dewy Verhoeven
  • Hans-Peter Weikard

Abstract

Land subsidence threatens the living conditions of about 1.2 billion people world-wide in deltaic regions characterized by soft top soil. Economic activity in these areas requires lowering groundwater levels to keep the land sufficiently dry, which leaves future generations worse off by accelerating subsidence and increasing future costs. This paper provides a model that recognizes this trade-off and yields analytical expressions for the groundwater level paths that optimally manage the dynamics of land subsidence. Applying our model to the paradigm case of Dutch agricultural peatlands, we find that accounting for dynamic efficiency increases welfare by more than 2.5 percent compared to a myopic policy benchmark, and these gains can be about 10 percent within reasonable parameter ranges. Our results support current proposals to reduce subsidence, even without considering additional social benefits from avoided carbon dioxide emissions.

Suggested Citation

  • Suphi Sen & Dewy Verhoeven & Hans-Peter Weikard, 2023. "Sinking Land: Optimal Control of Subsidence," CESifo Working Paper Series 10683, CESifo.
    • Handle: RePEc:ces:ceswps:_10683
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    References listed on IDEAS

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    1. Koster, Hans R.A. & Ommeren, Jos van, 2015. "A shaky business: Natural gas extraction, earthquakes and house prices," European Economic Review, Elsevier, vol. 80(C), pages 120-139.
    2. Sweeney, James L., 1993. "Economic theory of depletable resources: An introduction," Handbook of Natural Resource and Energy Economics, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 3, chapter 17, pages 759-854, Elsevier.
    3. Reinelt, Peter, 2020. "Spatial-dynamic seawater intrusion and pumping cost externalities in a confined aquifer," Resource and Energy Economics, Elsevier, vol. 59(C).
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    Keywords

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    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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