(Anti-)Coordination Problems with Scarce Water Resources
This paper deals with the interactions between farmers who can choose between two water supplies (groundwater or rainwater) which are interdependent and have different productivities. Collecting rainwater reduces the amount of water that can replenish the aquifer and allows farmers to avoid the pumping cost externality (but increases the cost of pumping groundwater). We show that multiple equilibria can exist. For a policy-maker, this immediately raises the equilibrium selection issue. This problem is worsened by the fact that the number of equilibria increases with a decrease in the recharge rate. In addition, comparative statics show that, depending on the equilibrium, a policy intervention can have opposite effects. Finally, we show that asymmetric equilibria can also exist, when one group of farmers chooses to harvest rainwater to avoid the pumping cost externality and the other group chooses to pump groundwater.
|Date of creation:||Sep 2012|
|Date of revision:||Sep 2012|
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- Koundouri, Phoebe, 2004.
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38425, University Library of Munich, Germany.
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Other publications TiSEM
b0eba71b-2d15-471a-b057-4, Tilburg University, School of Economics and Management.
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- Sittidaj Pongkijvorasin & James Roumasset, 2007.
"Optimal Conjunctive Use of Surface and Groundwater with Recharge and Return Flows: Dynamic and Spatial Patterns ,"
Review of Agricultural Economics,
Agricultural and Applied Economics Association, vol. 29(3), pages 531-539.
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- Hubert Stahn & Agnès Tomini, 2011.
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- Hubert Stahn & Agnès Tomini, 2015. "Rainwater Harvesting under Endogenous Capacity of Storage : a Solution to Aquifer Preservation," Annals of Economics and Statistics, GENES, issue 119-120, pages 209-234.
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- Knapp Keith C. & Olson Lars J., 1995. "The Economics of Conjunctive Groundwater Management with Stochastic Surface Supplies," Journal of Environmental Economics and Management, Elsevier, vol. 28(3), pages 340-356, May.
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- Catarina Roseta-Palma, 2003. "Joint Quantity/Quality Management of Groundwater," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(1), pages 89-106, September.
- 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.
- 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.
- Tsur, Yacov & Graham-Tomasi, Theodore, 1991. "The buffer value of groundwater with stochastic surface water supplies," Journal of Environmental Economics and Management, Elsevier, vol. 21(3), pages 201-224, November.
- Hubert Stahn & Agnès Tomini, 2010. "A drop of rainwater against a drop of groundwater: does rainwater harvesting really allow us to spare Groundwater?," Working Papers halshs-00443667, HAL.
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