On-Farm Reservoir Adoption in the Presence of Spatially Explicit Groundwater Use and Recharge
By: Kovacs, Kent; Popp, Michael; Bryce, Kristofer; West, Grant
Kovacs, Kent; Popp, Michael; Bryce, Kristofer; West, Grant, On-Farm Reservoir Adoption in the Presence of Spatially Explicit Groundwater Use and Recharge, Journal of Agricultural and Resource Economics, Volume 40, Issue 1, January 2015, Pages 23-49
Groundwater management is conducted in spatial aquifers where well pumping results in localized cones of depression. This is in contrast to the single-cell aquifer used in most economic analyses that assumes groundwater depletion occurs uniformly over a study area. We address two aspects of the optimal management of groundwater: a spatially explicit representation of the aquifer and the potential of on-farm reservoirs to recharge the underlying aquifer. A spatial-dynamic model of the optimal control of groundwater use and on-farm reservoir adoption is developed. Results suggest that a single-cell aquifer overestimates groundwater use and farm net returns over thirty years.