Strategic Games in Groundwater Management

Abstract

Previous work has shown that quality-quantity interactions may alter the typical results of private management under the assumption of myopic behavior. The main objective of the paper is to analyse the role of feedback strategies in a model containing an integrated quantity-quality approach, analyzing the impact on water use, pollution and shadow resource prices.The case of symmetric players is shown to yield results that are similar to those of models in previous literature, in that it establishes myopic and optimal solutions as extremes, with feedback solutions somewhere in between. However, as di¤erent water users do not have similar objectives or constraints, it is important to consider the case of asymmetric players. This paper shows that when agents are asymmetric, especially as regards external e¤ects, strategic solutions can be more extreme than the myopic ones.

Out of Sight, Not Out of Mind: Developments in Economic Models of Groundwater Management

“…The sensitivity of user behavior to spatial aquifer characteristics appears even in a laboratory setting (Liu, Suter, Messer, Duke, & Michael, 2014;Suter, Duke, Messer, & Michael, 2012). Moreover, in the simpler models, users are assumed to be homogeneous, although a few authors have considered user heterogeneity and highlighted the different results that strategic interactions can yield (Erdlenbruch, Tidball, & van Soest, 2008;Koundouri & Christou, 2006;Roseta-Palma & Brasão, 2004;Saleh, Gürler, & Berk, 2011).…”

Groundwater Extraction for Irrigation Purposes: The Case of Asymmetric Players

“…First, in this study agents are supposed to have different water demand as opposed to the classical studies of Gisser and Sanchez (1980) [12], Rubio and Casino (2001) [22], and Esteban and Albiac (2011) [8], where agents were considered to be identical in their demand for the water resource. Also unlike Roseta-Palma and Brasão [21] and de Frutos Cachorro et al (2020) [11], who have already considered the asymmetry in water demand for different uses (farming and public supply), the agents in this study are using the groundwater for the same purpose -irrigation of crops -and have the same elasticity of demand (both agents are farmers and they differ in the land size -hence the difference in the amount of water in demand, but not in demand elasticity). Second, as the size of land of two farmers (a small farmer and a big farmer) is not the same there is no reason to assume that the future discount rates will be the same, as well stated in de-Paz et al [18].…”

“…Introduction of asymmetries allows to obtain models that can better describe real world situations. For example, Roseta-Palma and Brasão (2004) [21] considered asymmetries in demand and costs, and Erdlenbruch et al (2007) [7] focused on asymmetry in opportunity costs of resource harvesting. Only quite recently the idea of the comparison between the non-cooperative and cooperative solutions for agents with asymmetric time-preferences have been introduced in works of Marín-Solano and Shevkoplyas (2011) [16], de-Paz et al (2013) [18] and Ekeland et al (2013) [5], as examples.…”