Groundwater management: Waiting for a drought

TY - JOUR

T1 - Groundwater management

T2 - Waiting for a drought

AU - Amundsen, Eirik S.

AU - Jensen, Frank

N1 - "We thank Professor Lars Gårn Hansen and the participants in the EAERE conference in Zurich in 2016, in particular, Professor Ariel Dinar, for valuable comments on earlier drafts of this article. The usual disclaimer applies."

PY - 2019/11/1

Y1 - 2019/11/1

N2 - In this article we present a stylized model for optimal management of an unconfined groundwater resource when the threat of drought exists. The drought is modeled as a stochastic event that hits at an uncertain date and two benchmark management policies are investigated: (a) A policy of optimal dynamic management ignoring the threat of drought; and (b) an economically optimal policy that accounts for the threat of a drought. We show that the optimal predrought steady-state equilibrium stock size of groundwater under policy b is larger than that under policy (a) Furthermore, we show that an increase in the probability of a drought gives rise to two counteracting effects: One in the direction of a larger predrought steady-state equilibrium stock size (a recovery effect) and one in the direction of a lower predrought steady-state equilibrium stock (an extinction effect). We find that the recovery effect dominates the extinction effect. Recommendations for Resource Managers:. We analyze two groundwater extraction policies that can be used when a threat of drought exists: (a) Dynamic optimal management ignoring the threat of drought; and (b) dynamic optimal management taking the threat of drought into account. We show that the predrought steady-state equilibrium stock size of water should be larger under the policy (b) than under policy (a). This conclusion has three implications for resource managers: Current groundwater management should take future extraction possibilities into account. A resource manager ought to take the threat of drought into account in groundwater management. A buffer stock of water should be built-up before the drought to be drawn upon during the event.

AB - In this article we present a stylized model for optimal management of an unconfined groundwater resource when the threat of drought exists. The drought is modeled as a stochastic event that hits at an uncertain date and two benchmark management policies are investigated: (a) A policy of optimal dynamic management ignoring the threat of drought; and (b) an economically optimal policy that accounts for the threat of a drought. We show that the optimal predrought steady-state equilibrium stock size of groundwater under policy b is larger than that under policy (a) Furthermore, we show that an increase in the probability of a drought gives rise to two counteracting effects: One in the direction of a larger predrought steady-state equilibrium stock size (a recovery effect) and one in the direction of a lower predrought steady-state equilibrium stock (an extinction effect). We find that the recovery effect dominates the extinction effect. Recommendations for Resource Managers:. We analyze two groundwater extraction policies that can be used when a threat of drought exists: (a) Dynamic optimal management ignoring the threat of drought; and (b) dynamic optimal management taking the threat of drought into account. We show that the predrought steady-state equilibrium stock size of water should be larger under the policy (b) than under policy (a). This conclusion has three implications for resource managers: Current groundwater management should take future extraction possibilities into account. A resource manager ought to take the threat of drought into account in groundwater management. A buffer stock of water should be built-up before the drought to be drawn upon during the event.

KW - drought

KW - groundwater management

KW - uncertainty

U2 - 10.1111/nrm.12209

DO - 10.1111/nrm.12209

M3 - Journal article

AN - SCOPUS:85060344534

SN - 0890-8575

VL - 32

JO - Natural Resource Modeling

JF - Natural Resource Modeling

IS - 4

M1 - e12205

ER -