Withdrawing Water from an Aquifer: The Economics

5 Pages Posted: 30 May 2017

See all articles by Peter Marcel Debaere

Peter Marcel Debaere

University of Virginia - Darden School of Business; Centre for Economic Policy Research (CEPR)

Abstract

Water is a renewable natural resource. Driven by solar energy and gravity, the global water cycle indefinitely circulates water through the atmosphere, over continents, and across oceans. On a more local level, however, water sometimes has more of a nonrenewable character because it can be depleted, at least to some degree. Withdrawing too much water from an aquifer that has only limited recharge, for example, diminishes stored water. This note discusses groundwater withdrawal, how it is optimally done, and how it depends on the particular institutional setting.

Excerpt

UVA-GEM-0119

Feb. 25, 2014

Withdrawing Water from AN Aquifer: THE ECONOMICS

Water is a renewable natural resource. Driven by solar energy and gravity, the global water cycle indefinitely circulates water through the atmosphere, over continents, and across oceans. On a more local level, however, water sometimes has more of a nonrenewable character because it can be depleted, at least to some degree. Withdrawing too much water from an aquifer that has only limited recharge, for example, diminishes stored water. This note discusses groundwater withdrawal, how it is optimally done, and how it depends on the particular institutional setting.

Unlike surface water, which is measured as a flow over a period of time, groundwater is a stored stock and is measured at a particular moment in time. Withdrawing groundwater now, therefore, will require explicit consideration of future water use: Indeed, using more scarce groundwater today means having less stored for the future. Consequently, water users will want to use available groundwater optimally over time (i.e., they will want to use water in such a way that it achieves the maximum possible benefit over cost, explicitly comparing the benefits and costs of water use at each moment in time).

Figure 1. Demand for water and the cost of pumping.

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Keywords: renewable resource

Suggested Citation

Debaere, Peter Marcel, Withdrawing Water from an Aquifer: The Economics. Darden Case No. UVA-GEM-0119, Available at SSRN: https://ssrn.com/abstract=2974630

Peter Marcel Debaere (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/html/direc_detail.aspx?styleid=2&id=5794

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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