Drought and groundwater management
Research output: Working paper › Research
This paper considers the problem of a water management authority faced with the threat of a drought that hits at an uncertain date. Three management policies are investigated: i) a laissez-faire (open-access) policy of automatic adjustment through a zero marginal private net benefit condition, ii) a policy of optimal dynamic management ignoring the threat of the drought and relying on automatic adjustments through a zero marginal social net benefit condition, iii) an economically optimal dynamic policy taking account of the threat of a drought. In particular, we show that the optimal pre-drought steady-state equilibrium stock size of water under policy iii) is smaller than under policy ii) and, hence, a precautionary stock size should not be built up prior to the drought.
Original language | English |
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Place of Publication | Frederiksberg |
Publisher | Department of Food and Resource Economics, University of Copenhagen |
Number of pages | 28 |
Publication status | Published - Jun 2016 |
Series | IFRO Working Paper |
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Number | 2016/04 |
Links
- http://econpapers.repec.org/RePEc:foi:wpaper:2016_04
Final published version
ID: 163986522