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Is the Gisser and Sanchez model too simple to discuss the economic relevance of groundwater management?

Author

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  • Agnes Tomini

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper discusses the framing of the model of Gisser and Sánchez (1980) [9] which is commonly reproduced by the follow-up literature. We note that results on the magnitude of welfare gains from optimal groundwater management are affected by the models׳ limitations, such as the commonly used assumption on the linear relationship between pumping cost and the water table level, and the absence of considerations for non-consumptive benefits. We question the appropriateness of these assumptions since the stock effect (the dependence of extraction cost and/or that of benefits on the stock of resource) affects the time variation of the shadow price. We demonstrate that this leads to a declining value of in situ resource over time. As such, its addition on marginal extraction cost may be negligible, and consequently favors the validation of the Gisser-Sánchez effect.

Suggested Citation

  • Agnes Tomini, 2014. "Is the Gisser and Sanchez model too simple to discuss the economic relevance of groundwater management?," Post-Print hal-01463916, HAL.
    • Handle: RePEc:hal:journl:hal-01463916
    DOI: 10.1016/j.wre.2014.05.004
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    Cited by:

    1. Faye, Amy & Msangi, Siwa, 2018. "Rainfall variability and groundwater availability for irrigation in Sub-Saharan Africa: evidence from the Niayes region of Senegal," MPRA Paper 92625, University Library of Munich, Germany.
    2. Quintana Ashwell, Nicolas E. & Peterson, Jeffrey M. & Hendricks, Nathan P., 2018. "Optimal groundwater management under climate change and technical progress," Resource and Energy Economics, Elsevier, vol. 51(C), pages 67-83.
    3. Kim, C.S. & Fuglie, Keith O. & Wallander, Steve & Wechsler, Seth, 2015. "Endogenous Technical Change and Groundwater Management: Revisiting the Gisser-Sanchez Paradox," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205350, Agricultural and Applied Economics Association.
    4. Pereau, Jean-Christophe & Pryet, Alexandre & Rambonilaza, Tina, 2019. "Optimality Versus Viability in Groundwater Management with Environmental Flows," Ecological Economics, Elsevier, vol. 161(C), pages 109-120.
    5. Amine Chekireb & Julio Goncalves & Hubert Stahn & Agnes Tomini, 2021. "Private exploitation of the North-Western Sahara Aquifer System," AMSE Working Papers 2144, Aix-Marseille School of Economics, France.
    6. Jean-Christophe Pereau & Lauriane Mouysset & Luc Doyen, 2018. "Groundwater Management in a Food Security Context," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(2), pages 319-336, October.
    7. Siwa Msangi & Sarah Ann Cline, 2016. "Improving Groundwater Management for Indian Agriculture: Assessing Tradeoffs Across Policy Instruments," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(03), pages 1-33, September.
    8. Sears, Louis S. & Lin Lawell, C.-Y. Cynthia & Walter, M. Todd, 2020. "Groundwater Under Open Access: A Structural Model of the Dynamic Common Pool Extraction Game," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304276, Agricultural and Applied Economics Association.

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    rent; Scarcity;

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