Optimal Mechanisms for Heterogeneous Multi-cell Aquifers
Standard economic models of groundwater management impose restrictive assumptions regarding perfect transmissivity (i.e., the aquifer behaves as a bathtub), no external effects of groundwater stocks, observability of individual extraction rates, and/or homogenous agents. In this article, we derive regulatory mechanisms for inducing the socially optimal extraction path in Markov perfect equilibrium for aquifers in which these assumptions do not hold. In spite of the complexity of the underlying system, we identify an interesting case in which a simple linear mechanism achieves the social optimum. To illustrate potential problems that can arise by erroneously imposing simplifying assumptions, we conduct a simulation based on data from the Indian state of Andhra Pradesh.
|Date of creation:||Mar 2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.feem.it/Email:
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Khalatbari, Firauzeh, 1977. "Market Imperfections and the Optimum Rate of Depletion of Natural Resources," Economica, London School of Economics and Political Science, vol. 44(176), pages 409-14, November.
- Fisher, Anthony C. & Rubio, Santiago J., 1997. "Adjusting to Climate Change: Implications of Increased Variability and Asymmetric Adjustment Costs for Investment in Water Reserves," Journal of Environmental Economics and Management, Elsevier, vol. 34(3), pages 207-227, November.
- Shiferaw, Bekele & Reddy, V. Ratna & Wani, Suhas P., 2008. "Watershed externalities, shifting cropping patterns and groundwater depletion in Indian semi-arid villages: The effect of alternative water pricing policies," Ecological Economics, Elsevier, vol. 67(2), pages 327-340, September.
- Larry Karp, 2005.
"Nonpoint Source Pollution Taxes and Excessive Tax Burden,"
Environmental & Resource Economics,
European Association of Environmental and Resource Economists, vol. 31(2), pages 229-251, 06.
- Karp, Larry, 1998. "Nonpoint Source Pollution Taxes and Excessive Tax Burden," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt4z62b52k, Department of Agricultural & Resource Economics, UC Berkeley.
- Aggarwal, Rimjhim M. & Narayan, Tulika A., 2004. "Does inequality lead to greater efficiency in the use of local commons? The role of strategic investments in capacity," Journal of Environmental Economics and Management, Elsevier, vol. 47(1), pages 163-182, January.
- World Bank, 2001. "India : Power Supply to Agriculture, Volume 1. Summary Report," World Bank Other Operational Studies 15288, The World Bank.
- 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.
- Brozovic, Nicholas & Sunding, David L. & Zilberman, David, 2006. "On the spatial nature of the groundwater pumping externality," 2006 Annual meeting, July 23-26, Long Beach, CA 21035, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Athanassoglou, Stergios, 2010. "Dynamic nonpoint-source pollution control policy: Ambient transfers and uncertainty," Journal of Economic Dynamics and Control, Elsevier, vol. 34(12), pages 2494-2509, December.
- Shah, Tushaar & Scott, Christopher & Kishore, Avinash & Sharma, Abhishek, 2004.
"Energy-irrigation nexus in South Asia: improving groundwater conservation and power sector viability,"
IWMI Research Reports
H036593, International Water Management Institute.
- Shah, Tushaar & Scott, C. & Kishore, A. & Sharma, A., 2003. "Energy-irrigation nexus in South Asia: Improving groundwater conservation and power sector viability," IWMI Research Reports H033885, International Water Management Institute.
- Santiago Rubio & Begoña Casino, 2003. "Strategic Behavior and Efficiency in the Common Property Extraction of Groundwater," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 26(1), pages 73-87, September.
- Dasgupta, Partha, 2001. "Human Well-Being and the Natural Environment," OUP Catalogue, Oxford University Press, number 9780199247882.
- Xepapadeas, A. P., 1992. "Environmental policy design and dynamic nonpoint-source pollution," Journal of Environmental Economics and Management, Elsevier, vol. 23(1), pages 22-39, July.
- Catarina Roseta-Palma & Anastasios Xepapadeas, 2004. "Robust Control in Water Management," Journal of Risk and Uncertainty, Springer, vol. 29(1), pages 21-34, 07.
- repec:cup:cbooks:9780521637329 is not listed on IDEAS
- Eswaran, Mukesh & Lewis, Tracy R, 1984. "Appropriability and the Extraction of a Common Property Resource," Economica, London School of Economics and Political Science, vol. 51(204), pages 393-400, November.
- Frederick Ploeg, 2011. "Rapacious Resource Depletion, Excessive Investment and Insecure Property Rights: A Puzzle," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 48(1), pages 105-128, January.
When requesting a correction, please mention this item's handle: RePEc:fem:femwpa:2011.28. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (barbara racah)
If references are entirely missing, you can add them using this form.