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Estimating accounting prices for common pool natural resources: A distance function approach

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  • Phoebe Koundouri
  • Anastasios Xepapadeas

Abstract

We extend existing methodology for estimating shadow prices for exhaustible natural resources to renewable resources with common pool characteristics, using groundwater in irrigated agriculture as an example. The resource's shadow price is defined in terms of a perfect foresight open loop Nash equilibrium. Furthermore, we introduce a new estimation approach and derive shadow groundwater scarcity rents by estimating a stochastic restricted distance function using duality results between distance and cost functions. This approach is appropriate when price information is not available or when cost, profit, or revenue functions representations are precluded because of violations of the required behavior assumptions. We use our results to study policy implications for groundwater management.

Suggested Citation

  • Phoebe Koundouri & Anastasios Xepapadeas, 2004. "Estimating accounting prices for common pool natural resources: A distance function approach," DEOS Working Papers 0405, Athens University of Economics and Business.
    • Handle: RePEc:aue:wpaper:0405
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    References listed on IDEAS

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    1. Koundouri, Phoebe & Pashardes, Panos & Swanson, Timothy & Xepapadeas, Anastasios, 2003. "The Economics of Water Management in Developing Countries Problems, Principles and Policies," MPRA Paper 38137, University Library of Munich, Germany.
    2. Brock, W. A. & Xepapadeas, A., 2004. "Management of interacting species: regulation under nonlinearities and hysteresis," Resource and Energy Economics, Elsevier, vol. 26(2), pages 137-156, June.
    3. Lau, Lawrence J., 1976. "A characterization of the normalized restricted profit function," Journal of Economic Theory, Elsevier, vol. 12(1), pages 131-163, February.
    4. 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.
    5. Phoebe Koundouri & Panos Pashardes & Timothy Swanson & Anastasios Xepapadeas, "undated". "The Economics of Water Management in Developing Countries Problems, Principles and Policies," DEOS Working Papers 0303, Athens University of Economics and Business.
    6. Dasgupta, Partha & Mäler, Karl-Göran, 2000. "Net national product, wealth, and social well-being," Environment and Development Economics, Cambridge University Press, vol. 5(1), pages 69-93, February.
    7. Howe, Charles W., 2002. "Policy issues and institutional impediments in the management of groundwater: lessons from case studies," Environment and Development Economics, Cambridge University Press, vol. 7(4), pages 625-641, October.
    8. Koundouri, Phoebe, 2000. "Three approaches to measuring natural resource scarcity: theory and application to groundwater," MPRA Paper 38265, University Library of Munich, Germany.
    9. Robert Halvorsen & Tim R. Smith, 1991. "A Test of the Theory of Exhaustible Resources," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(1), pages 123-140.
    10. Howe, Charles W., 2002. "Policy issues and institutional impediments in the management of groundwater: lessons from case studies," Environment and Development Economics, Cambridge University Press, vol. 7(4), pages 605-616, October.
    11. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
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    Cited by:

    1. Groom, Ben & Koundouri, Phoebe, 2011. "The Economics of Water Resource Allocation: Valuation Methods and Policy Implications," MPRA Paper 41902, University Library of Munich, Germany.
    2. Godwin Kwabla Ekpe & Anna A. Klis, 2023. "Spillover Effects in Irrigated Agriculture from the Groundwater Commons," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(3), pages 469-507, November.
    3. Koundouri, Phoebe & Babalos, Vassilis & Stithou, Mavra & Anastasiou, Ioannis, 2011. "A Micro-Econometric Approach to Deriving Use and Non-Use Values of in-situ Groundwater: The Vosvozis Case Study, Greece," MPRA Paper 38266, University Library of Munich, Germany.
    4. Phoebe Koundouri, 2003. "Potential for groundwater management: Gisser-Sanchez effect reconsidered," DEOS Working Papers 0307, Athens University of Economics and Business.
    5. Sampson, Gabriel S. & Hendricks, Nathan P. & Taylor, Mykel R., 2019. "Land market valuation of groundwater," Resource and Energy Economics, Elsevier, vol. 58(C).
    6. Anastasios Xepapadeas & Phoebe Koundouri, 2004. "Introduction to special section on Groundwater Economics and Policy," DEOS Working Papers 0406, Athens University of Economics and Business.
    7. Ben Groom & Phoebe Koundouri & Timothy Swanson, 2005. "Cost-benefit analysis and efficient water allocation in Cyprus," DEOS Working Papers 0502, Athens University of Economics and Business.
    8. Bostian, Moriah B. & Herlihy, Alan T., 2014. "Valuing tradeoffs between agricultural production and wetland condition in the U.S. Mid-Atlantic region," Ecological Economics, Elsevier, vol. 105(C), pages 284-291.
    9. Khataza, Robertson R.B. & Hailu, Atakelty & Kragt, Marit E. & Doole, Graeme, 2017. "The opportunity costs of enhancing legume‐based sustainable agricultural intensification practices in Malawi," 2017 Conference (61st), February 7-10, 2017, Brisbane, Australia 258672, Australian Agricultural and Resource Economics Society.
    10. Phoebe Koundouri & Osiel Davila & Yannis Anastasiou & Antonios Antypas & Theodoros Mavrogiorgis & Aris Mousoulides & Marianna Mousoulidou & Katerina Vasiliou, 2013. "An Econometric Analysis of Agricultural Production, Focusing on the Shadow Price of Groundwater: Policies Towards Socio-Economic Sustainability," DEOS Working Papers 1313, Athens University of Economics and Business.

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