UNCERTAINTY AND IRREVERSIBILITY IN GROUNDWATER RESOURCE-MANAGEMENT

Optimal exploitation of renewable groundwater resources when extractio n affects the probability of occurrence of an irreversible event is st udied. The term irreversible signifies that the event occurrence rende rs the resource obsolete. It is found that uncertainty concerning the event occurrence has a profound effect. Under certainty-when the stock level below which the event occurs is known in advance-the optimal st ate process converges to a unique equilibrium state. Under uncertainty , when the event occurrence level is unknown, we identify equilibrium intervals and show that optimal processes initiated elsewhere converge to a boundary of one of these intervals. Inside an equilibrium interv al, the expected loss due to the event occurrence is so high that it d oes not pay to extract in excess of recharge, even though under certai nty doing so would be beneficial. (C) 1995 Academic Press, Inc.