Dynamics of agricultural groundwater extraction

Agricultural shallow groundwater extraction can result in desiccation of ne ighbouring nature reserves and degradation of groundwater quality in the Ne therlands, whereas both externalities are often not considered when agricul tural groundwater extraction patterns are being determined. A model is deve loped to study socially optimal agricultural shallow groundwater extraction patterns. It becomes clear that the current price of groundwater is ineffi cient and provides fewer incentives for the adoption of modern irrigation t echnology than does a system that considers the cost of desiccation and gro undwater contamination in the price of groundwater. The study shows that in cluding the impact of groundwater extraction on groundwater quality into a resource management model is particularly significant if the recharge of gr oundwater is large compared with stock size. (C) 2001 Elsevier Science B.V. All rights reserved.