|Title: ||Three approaches to measuring natural resource scarcity : theory and application to groundwater|
|Authors: ||Koundouri, Phoebe|
|Issue Date: ||24-Oct-2000|
Efficient pricing of a resource incorporates both marginal cost of extraction and scarcity rents. Since
groundwater resources exhibit natural supply constraints, scarcity rents must be imposed on current
users. Given the difficulty of establishing clear groundwater ownership rights, scarcity value frequently
goes unrecognized and is difficult to estimate. This results in inefficient pricing and misallocation of the
resource. This thesis builds on three different methods to develop appropriate theoretical and empirical
models relevant for indirect estimation of these shadow scarcity rents, which we consider as the initial
and most challenging step towards efficient groundwater management. Empirical analyses are based on
economic and hydrological data from t he island of Cyprus, representative of semi-arid regions.
Chapter 2 critically assesses previous theoretical and empirical attempts to derive the increase in
social benefits from efficient pricing of groundwater and examines the potential for groundwater management.
This potential is seriously challenged by Gisser-Sanchez's Effect (GSI): i.e. net benefits from
optimally managing groundwater are insignificant for all practical purposes. Chapter 3 attempts a reexamination
of GSI by developing a dynamic model of adaptation to increasing groundwater scarcity,
when backstop technology is available. Both groundwater scarcity rents and management benefits are
derived by simulating the optimal and competitive-commonality solutions. Results point to the absence
of GSI in aquifers facing complete exhaustion in the near future.
Chapter 4 proposes a refinement of revealed preference methods of valuation, by combining the
hedonic and travel cost methods, and applies the refined model to derive the willingness to pay for
groundwater quality. It is claimed t hat hedonic valuation of quality attributes can be misleading when
the exogeneity assumption, with respect to these attributes, to sample selection is violated. Hence,
the simultaneity between hedonic valuation and sample selection is modelled in the context of producer
behaviour and investigated empirically in the case of land demanded for use as an input either in
agricultural production or touristic development. The empirical analysis suggests that failing to correct
for sample selection results in a biased valuation of groundwater quality. In chapter 5 duality theory
is employed to develop the distance function methodology of deriving shadow groundwater scarcity
rents. The empirical application of the model involves estimating a stochastic input distance function
from which the in situ shadow price of groundwater is derived. Chapter 6 concludes the thesis by
comparing and contrasting the magnitude of groundwater scarcity rents and willingness to pay for
scarce groundwater quality, derived from the models put forward in this research.|
|Appears in Collections:||Theses - Faculty of Economics|
This item has been accessed 1226 times.
Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.