Water as a common pool resource: collective action in groundwater management and nonpoint pollution abatement
- Autores: Encarnación Esteban Gracia
- Directores de la Tesis: José Albiac Murillo (dir. tes.)
- Lectura: En la Universidad de Zaragoza ( España ) en 2010
- Idioma: español
- Tribunal Calificador de la Tesis: Ma. Àngela Xabadia Palmada (presid.), Julio Sánchez Chóliz (secret.), Santiago Jose Rubio Jorge (voc.), Renan Ulrich Goetz (voc.), Catarina Roseta Palma (voc.)
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- Resumen
The pressure on water resources has been mounting worldwide during last century, creating serious problems in basins at global scale. This growing water demand is driven by the increase in population and income across the world. The excessive pressure has resulted in pervasive water degradation and ecosystem damages. The growing water extractions generate water scarcity in many of the world watersheds, and a huge water quality degradation from pollution loads leading to many tracts of rivers and whole aquifers being spoiled, and losing their capacity to support ecosystems and even human activities. In some regions, climate change can aggravate the severity and the duration of these effects creating devastating impacts in water resources and aquatic ecosystems.
This growing scarcity and deterioration of surface and groundwater resources demonstrates that water resources mismanagement is the general rule worldwide and sustainable management is quite exceptional. The main reason for this mismanagement of water resources is that water is mostly a common pool resource with associated environmental externalities. Then, the approach to solving management problems involves the cooperation among stakeholders through the right institutions and organizations.
Water scarcity and quality degradation in Spain is the consequence of the increasing water demands from the strongly developing economic sectors during the last fifty years. Water scarcity has been driven by the development of irrigated agriculture, which has created a significant pressure in nearly all basins and aquifer systems in Spain. While quality degradation is linked mostly to urban and industrial sectors, there is also a significant contribution from agricultural activities to pollution emissions through runoff and leaching.
In Chapter 2 Groundwater and ecosystem damages: questioning the Gisser-Sánchez effect theoretically, the theoretical analysis deals with one of the more important results related with groundwater management, the Gisser-Sánchez effect. Gisser and Sánchez (1980) stated that regulation is useless in groundwater management because no policy can improve upon the free market or absence of regulation regime, a statement called the Gisser-Sánchez effect in the literature. The reality of the massive aquifer mismanagement worldwide demonstrates that the Gisser-Sánchez effect seems to be wrong, because free markets are destroying the resources with substantial welfare losses for society.
Gisser and Sánchez demonstrated theoretically their result with a dynamic model that links economic, hydrologic and agronomic components of groundwater pumping. This theoretical result is also illustrated with a numerical application in the Pecos River Basin of New Mexico. Both the theoretical and numerical applications support the finding that the free markets or no regulation regime in groundwater is preferred to any kind of policy regulation.
The main contribution of this chapter is expanding the model of Gisser and Sánchez by introducing the environmental effects of groundwater management. There are many ecosystems linked and dependent on large groundwater systems, and the aquifer depletion with a falling water table implies severe damages to the habitats and ecosystems and the disappearance of their servces. When these ecosystem damages are introduced in the model, the Gisser-Sánchez effect is untenable.
The empirical evidence highlights those most large groundwater systems worldwide, such as in India, US, China, or Pakistan, are being depleted because of the excessive extractions well above recharge levels. This depletion of aquifers generates also problems of water quality degradation by pollution loads or saline water intrusion in coastal aquifers. But this depletion has environmental effects that are not taken at all into account in the management of aquifers worldwide, and the consequence is that the ecosystems linked and dependent on these aquifer systems are progressively destroyed.
The purpose of the chapter is to demonstrate that the empirical evidence shows that regulation in groundwater resources is a needed policy to protect the quantity and quality of water in the aquifers. But there is another effect that is not taken normally into account in the literature and neither in groundwater management: the ecosystems damages. A clear example in the case of Spain is the Tablas wetlands along the upper Guadiana. In these wetlands, the continuous overdraft of the western La Mancha aquifer and the falling water table has degraded heavily the wetlands. The protection of aquifers and related ecosystems imply the design of policies and institutions to induce cooperation among stakeholders. The free market or no policy intervention approach proposed by Gisser and Sánchez becomes untenable.
Chapter 3 Groundwater and ecosystem damages: questioning the Gisser-Sánchez effect empirically illustrates empirically the model of groundwater management developed in chapter 2. This chapter analyzes empirically the cases of two of the most important aquifers in Spain, western La Mancha and eastern La Mancha. The main purpose is to show that the current situation in western La Mancha is close to the no regulation or free market regime, while in eastern La Mancha farmers are cooperating which implies that a regulation regime is running. The empirical analysis shows also that the no regulation regime in western La Mancha is driving to extinction the Tablas wetland system along the upper Guadiana, and the Tablas de Daimiel Natural Park. The analysis presented in chapter 3 compares three different management regimes in both aquifers: the regime of no cooperation among farmers or free market, the regime of partial cooperation where farmers internalize the extraction costs externality, and finally the regime of full cooperation where farmers internalize not just the extraction costs externality but also the environmental externality. The free market regime is a myopic pumping rule where farmers do not internalize the extraction costs and the environmental costs from their pumping decisions. In the regime of partial cooperation, farmers internalize the extraction costs but ignore the environmental costs from their pumping decisions. And finally, in the last regime of full cooperation farmers internalize both the extraction costs and the environmental costs. A comparison is then made between the current management in western and in eastern La Mancha aquifers, with the results simulated by these three different management regimes.
The results of the simulations under the three different regimes show that in the case of no cooperation farmers extract excessive amounts of water without taking into account that other farmers are also extracting water, reducing the storage and depleting the aquifer. The results show that under no cooperation both aquifers run towards destruction. When farmers cooperate partially by internalizing the extraction costs externality, they maximize the present value of their collective future stream of private profits. In this case results show that farmers moderate the quantity of water pumped with respect to the no cooperation regime. The water table level is higher than under no cooperation because farmers limit their pumping. Finally, in the full cooperation regime farmers internalize both the extraction and environmental costs, and the results show the recovery of the water table because farmers reduce their extractions considerably. The water table recovers under partial cooperation when extraction costs are considered, but under full cooperation when the environmental costs are also considered the water table recovery is faster and attains a higher level.
The comparison among the results of simulating the three regimes and the current situation of both aquifers yields the following conclusions: the current regime in the western La Mancha aquifer is no cooperation and the aquifer goes towards destruction. The case is worrying because the continuous fall in the water table is going to continue irrespective of the billions of euros in investments of the Upper Guadiana Plan, that seems the worst policy alternative. The results indicate that the recovery of the Tablas system along the upper Guadiana and the Tablas de Daimiel Natural Park requires that farmers cooperate to reduce or even stop their extractions in order to recover the natural level of water table, a really unlikely event.
In the case of eastern La Mancha, results are more optimistic because partial cooperation among farmers can be observed in the last decade. Cooperation in this aquifer is being effective and the water table level has stabilized because farmers have managed to reduce extractions in the last ten years. But the results also show that in the eastern La Mancha aquifer farmers are internalizing the extractions costs but not the environmental costs, so further advances in cooperation are needed to curb extractions and recover the aquifer.
Chapter 4 The control of nonpoint pollution when damages are heterogeneous analyzes the problem of salinity leaching from farm lands to water courses. Salinity emissions are the consequence of nonpoint pollution processes characterized by the difficulty in identifying the responsible agent and the location and amount of pollution at the source. The polluting variable is water percolation which goes through the saline soils and draws salinity to the water courses.
The chapter develops a model with heterogeneous farms dedicated to irrigated agriculture. Farms have different characteristics regarding soils, crops, and irrigation systems. The main consequence of this heterogeneity among farms is that there are different pollution damage functions. The pollution damage functions depend on the type of soil of each farm, so water percolation in farms with saline soil is more polluting than water percolation in farms with moderate and non-saline soils. Because of the different pollution damage functions, there are three different pollution thresholds or pollution tax rates corresponding to each of the soil types, instead of a unique pollution threshold or tax rate in the case of a single pollution damage function.
The optimal policy to abate water percolation which is the polluting variable, requires the implementation of the three percolation thresholds of percolation tax rates. The model is used to analyze the loss in social welfare when a unique threshold or unique tax rate is implemented instead of the three thresholds of tax rates required by the different pollution damage functions. Most of the literature on nonpoint pollution does not consider the existence of different pollution damage functions. This implies that policy measures normally depend on just a single pollution threshold or tax rate, ignoring the possibility of heterogeneity. The model developed in this thesis shows that the loss in social welfare when a unique tax rate is implemented can be really high.
In order to show the inefficiencies when a uniform tax rate or threshold is implemented in a context of heterogeneous pollution damage functions, some scenarios are run in this model. The baseline scenario shows the situation when no regulation is implemented and farmers do not internalize the pollution damages from their production activities. The regulation with heterogeneity scenario shows the results of using the three different thresholds or tax rates, and each farm is optimally taxed. The regulation with homogeneity scenario simulates the case where a unique threshold is used for all farms without taking into account the differences in their pollution damage functions.
The results of the different scenarios show that there is a large fall in welfare when a uniform tax rate or threshold is implemented instead of the three rates or thresholds. The results also show that the decrease in welfare could be so large that non regulation could be preferred to regulation with the wrong tax rate or threshold. This result is important in terms of policy implications, because it highlights the large policy inefficiencies that arise if heterogeneity among farms is not taken into account in the design of pollution abatment measures.
Chapter 5 Pigouvian taxation to induce technological change and abate nonpoint pollution studies the problem of salinity leaching in the Ebro river. The idea of this chapter is to analyze the efficiency of implementing an input tax instrument in order to reduce salinity emissions. The model analyzes the case where there are heterogeneous farms with different characteristics of crops, irrigation technology and soil types. In this case and because of farm heterogeneity, the optimal input tax rate is different depending on the soils and the irrigation technology. In reality the implementation of six different rates is unfeasible given that there are transaction and administrative costs, and because of lack of information on soil types. Although the soil type is difficult to identify, the irrigation technology system is information that is available to the social planner. In this case and because of the impossibility of achieving a fist best policy measure, the social planner can implement an irrigation-based input tax in order to achieve a second best policy.
The chapter studies the implementation of an irrigation-based input tax instrument, where farmers are taxed differently depending on their irrigation technology system. Farmers using sprinkler are more efficient so they need less quantity of water to obtain the same quantity of output that farmers with flood. Farmers with sprinkle irrigation have higher efficiency and pay a lower tax than farmers with flood irrigation. The social planner implements an irrigation-based input tax instrument since tax rates are different depending on the irrigation technology.
Three different scenarios are run: the baseline or no regulation scenario, the scenario where six different tax rates are implemented, and the scenario with two irrigation-based instrument tax rates. Results show that there is an important difference in social welfare between the situation without regulation and the other two scenarios. The scenario that achieves the first best policy is the one with the six different tax rates. In the case of the irrigation-based instrument the results highlight that social welfare is lower compared with the optimal scenario of six tax rates. Nevertheless, the irrigation-based instrument has the advantage of inducing farmers to change their irrigation technology. Farmers with flood irrigation pay annually a high tax, and this tax is higher than the cost of switching towards sprinkle irrigation technology. An irrigation-based instrument reduces the level of emissions and it is also an incentive for farmers to adopt a more efficient technology.
