We consider an exogeneous and irreversible sho ck on a groundwater resource: a decrease in the recharge rate of the aquifer. We compare optimal extraction paths and social costs for optimal adaptation in two cases: under certainty, i.e. when the date of occurrence of the shock is known and under uncertainty, when the date of occurrence of the shock is a random variable. We show that the increase of uncertainty leads to a decrease in precautionnary behaviour, in the short-run and in the long-run. Moreover, we apply our model to the particular case of the Western la Mancha aquifer. We show in this context that information aquisition may not be interesting for the manager of the resource, at least when the shock occurs later in time.
Optimal adaptation strategies to shocks on groundwater resources
14 January 2014