Three Essays On The Economics Of Groundwater Extraction

The primary contribution of this thesis is to develop a series of hydroeconomic models to act as solution-oriented tools to conduct integrated groundwater management and provide fresh policy insights. Using spatially detailed economic and hydrologic data from a real-world aquifer, this thesis examines key groundwater management problems and suggests policies that might be used to control such systems. The thesis consists of three main essays focusing on issues in groundwater spatial dynamics and the design of optimal regulations. The first essay explores the importance of including well location decisions in spatially differentiated groundwater models to provide robust estimates of the gains from optimal management. Using a spatially differentiated and dynamic model of endogenous well location, this essay compares optimal and competitive extraction paths and well location decisions under alternative hypotheses as to the spatial distribution of groundwater.