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Integrated Groundwater Resource Management

Author

Listed:
  • James Roumasset

    () (University of Hawai‘i at Manoa & University of Hawai’i Economic Research Organization)

  • Christopher Wada

    () (University of Hawai’i Economic Research Organization)

Abstract

General principles of groundwater management for a single aquifer are extended to the management of multiple water resources, including additional aquifers, recycled wastewater, and desalinated seawater. Optimal groundwater extraction can be incentivized by pricing according to the Pearce equation for renewable resources, although the standard version of the equation must be modified in certain situations, e.g. to accommodate corner solutions or governance costs. Groundwater management and pricing must be coordinated with the management of watershed and related resources lest the benefits of conservation are squandered by wasting the water saved. Joint optimization also provides the basis for correctly pricing ecosystem services such as groundwater recharge. From the models and examples discussed, one can conclude that a systems approach is necessary, and ad hoc rules-of-thumb such as maximum-sustainable-yield are welfare reducing. Inasmuch as actual groundwater management may be far from efficient, the Gisser-Sanchez effect notwithstanding, we discuss the problem of optimal resource governance.

Suggested Citation

  • James Roumasset & Christopher Wada, 2014. "Integrated Groundwater Resource Management," Working Papers 201414, University of Hawaii at Manoa, Department of Economics.
  • Handle: RePEc:hai:wpaper:201414
    as

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    File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_14-14.pdf
    File Function: First version, 2014
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    References listed on IDEAS

    as
    1. Kenneth Arrow & Partha Dasgupta & Karl-Göran Mäler, 2003. "Evaluating Projects and Assessing Sustainable Development in Imperfect Economies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(4), pages 647-685, December.
    2. Nordhaus, William D, 1991. "To Slow or Not to Slow: The Economics of the Greenhouse Effect," Economic Journal, Royal Economic Society, vol. 101(407), pages 920-937, July.
    3. Roumasset James & Wada Christopher A, 2011. "Ordering Renewable Resources: Groundwater, Recycling, and Desalination," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-29, May.
    4. James Roumasset & Christopher Wada, 2012. "The Economics of Groundwater," Working Papers 2012-4, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    5. Roumasset, James & Wada, Christopher A., 2013. "A dynamic approach to PES pricing and finance for interlinked ecosystem services: Watershed conservation and groundwater management," Ecological Economics, Elsevier, vol. 87(C), pages 24-33.
    6. Roumasset James & Wada Christopher A, 2011. "Ordering Renewable Resources: Groundwater, Recycling, and Desalination," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-29, May.
    7. Farzin, Y. H., 1996. "Optimal pricing of environmental and natural resource use with stock externalities," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 31-57, October.
    8. 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.
    9. Pongkijvorasin, Sittidaj & Pitafi, Basharat A.K. & Roumasset, James A., 2006. "Pricing Resource Extraction With Stock Externalities," 2006 Annual meeting, July 23-26, Long Beach, CA 21340, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. 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.
    11. Endress, Lee H. & Roumasset, James A. & Zhou, Ting, 2005. "Sustainable growth with environmental spillovers," Journal of Economic Behavior & Organization, Elsevier, vol. 58(4), pages 527-547, December.
    12. Roumasset, James A. & Wada, Christopher A., 2012. "Ordering the extraction of renewable resources: The case of multiple aquifers," Resource and Energy Economics, Elsevier, vol. 34(1), pages 112-128.
    13. James Roumasset & Nori Tarui, 2010. "Governing the Resource: Scarcity-Induced Institutional Change," Working Papers 201015, University of Hawaii at Manoa, Department of Economics.
    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. Kaiser, Brooks & Roumasset, James, 2002. "Valuing indirect ecosystem services: the case of tropical watersheds," Environment and Development Economics, Cambridge University Press, vol. 7(04), pages 701-714, October.
    16. Pongkijvorasin, Sittidaj & Roumasset, James & Duarte, Thomas Kaeo & Burnett, Kimberly, 2010. "Renewable resource management with stock externalities: Coastal aquifers and submarine groundwater discharge," Resource and Energy Economics, Elsevier, vol. 32(3), pages 277-291, August.
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    More about this item

    Keywords

    Groundwater; renewable resources; dynamic optimization; sustainable yield; Pearce equation; marginal user cost; conjunctive use; water institutions; Gisser-Sanchez effect; governance; natural capital;

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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