This paper presents the results of an economic valuation of coral reef degradation at Eilat, Israeli Red Sea. We estimate the marginal prices of coral and fish diversity and water visibility at US$2.60 and US$1.20 per dive, respectively. From the standpoint of recreational diving welfare, the annual social costs of activities contributing to coral reef degradation are approximately US$2.86 million. To our knowledge, this is the first economic valuation of individual coral reef attributes and the first application of a choice experiment to coral reef valuation.
Groundwater basins are usually separated into aquifers that are hydrologically interrelated. This interrelation may take the form of water movement from one aquifer to another. When differentials in water quality exist, pumping from one of the aquifers can cause water movement that may be associated with degradation of its quality. A management policy that considers this interrelation may be preferable to an independent management of each aquifer. This paper develops a dynamic optimal control model to evaluate joint versus independent management. The optimal joint pumping management, in which two adjacent aquifers of different water qualities are interrelated, is analyzed and compared to independent aquifer pumping, and the situations where joint management is not required are identified. Policy implications are then derived and discussed. Finally, the theoretical model is applied to a case of interrelated aquifers in southern Israel. The empirical model identifies conditions (interest rate, agricultural fresh water supply rainfall recharge, price of surface water, drinking water quality standards) under which a joint policy is preferable. The empirical results confirm the theoretical ones. Copyright Kluwer Academic Publishers 1997groundwater management, groundwater quality, interrelated aquifers,
[1] This work considers the management of an aquifer with stochastic recharge and finite boundaries. For a class of such models we show that there is a positive threshold of the water stock that the manager should aim at keeping. Thus, under the optimal extraction regime at a time when the water stock is lower than this threshold, there should be no pumping from the aquifer, while at times when the water stock is greater than the threshold, all water in excess of the threshold level should be pumped. The threshold level happens to coincide with the aquifer boundary for sufficiently high unit cost of pumping, in which case, only the runoff water of excess recharge should be collected.
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