@article{Xie:211894,
      recid = {211894},
      author = {Xie, Yang and Zilberman, David},
      title = {Water-Storage Capacities versus Water-Use Efficiency:  Substitutes or Complements?},
      address = {2015},
      number = {1008-2016-79914},
      pages = {54},
      year = {2015},
      abstract = {We investigate the economic relation between two common  approaches to tackling
water scarcity and adapting to  climate change, namely expanding water-storage
capacities  and improving water-use efficiency. We build, analyze, and  extend a simple
model for capacity choices of dams,  incorporating stochastically dynamic control of
water  inventories and efficiency in water use. We show that  expanding water-storage
capacities could encourage water  users to improve water-use efficiency and
improving  water-use efficiency could increase optimal dam sizes even  if water-use
efficiency improvement decreases the water  demand. The possibility of
complementarity is numerically  illustrated by an empirical example of the California
State  Water Project. Our analysis implies that, if  complementarity holds, resources
should be distributed in a  balanced way between water-storage expansions and
water-use  efficiency improvement instead of being concentrated on one  side with the
other side being ignored.},
      url = {http://ageconsearch.umn.edu/record/211894},
      doi = {https://doi.org/10.22004/ag.econ.211894},
}