Econ 131 lecture 17

Econ 131 lecture 17 - Schedule Today: Economics of Water...

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Schedule Today: Economics of Water Thursday: Wrap up (Ch. 12) and examples for review TA/review session for Fnal Monday, December 5th: Warren Lecture Hall 2005, 6:30-8:20pm Tragedy of the Commons Unregulated, fresh water is an open-access resource (rival in consumption, but non-excludable) The tragedy of the commons applies, aquifers and rivers are often depleted Current research: The Ogallala Aquifer (Hornbeck and Keskin, working paper) Under much of the Great Plains, slow-recharge aquifer Discovered in the 1950’s, now nearing exhaustion in some midwestern counties
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Boundaries of Ogallala Aquifer Kansas Nebraska Central-pivot irrigation (invented in the 1950’s) transformed farming in counties located over the aquifer
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Value of Farmland Over Time Results Relative land values in areas above the aquifer capture the value of the resource (revealed preference approach) 1940: no difference 1950: $10 billion 1974: $29 billion (full potential of irrigation realized) 2002: $12 billion (depletion starting to become obvious)
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Policy? No limits on pumping water from the Ogallala: Open- access resource 1965: Legal decision that declines in water levels under farmland can be written off on taxes Adds another incentive to pump water quickly Recent regulation to prevent water waste (including Fnes for malfunctioning pumps) Still no limits on total use So How Should the Government Allocate Water?
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Competing Uses Water Imbalance
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This note was uploaded on 01/30/2012 for the course ECON 131 taught by Professor Groves during the Spring '09 term at UCSD.

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Econ 131 lecture 17 - Schedule Today: Economics of Water...

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