Files
Abstract
Groundwater management is conducted in spatial aquifers where well pumping results in localized
cones of depression. This is in contrast to the single-cell aquifer used in most economic analyses
that assumes groundwater depletion occurs uniformly over a study area. We address two aspects
of the optimal management of groundwater: a spatially explicit representation of the aquifer and
the potential of on-farm reservoirs to recharge the underlying aquifer. A spatial-dynamic model
of the optimal control of groundwater use and on-farm reservoir adoption is developed. Results
suggest that a single-cell aquifer overestimates groundwater use and farm net returns over thirty
years.