Friday, October 5, 2012: 4:55 PM
The purpose of this paper is to examine a range of alternative economic incentive-based policies to manage the joint quantity-quality groundwater resource problem. First we develop and analyze a model of groundwater exploitation for an exhaustible aquifer that is used as a common property resource in the presence of a groundwater pollutant. Next we use the information evolving from this work to suggest policies based on a range of economic incentives. The particular incentive examined is based on a second-best tax policy which evolves from the standards and charges approach.