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Seminar: Beyond Benefit-Cost Analysis: The Economics of Solving Water Resource Problems
September 24, 2019 @ 8:00 am - 5:00 pm
Please join us this Thursday at 4:00 PM in 158 Weaver Labs for a presentation by Dr. Eric Edwards, Assistant Professor, in Agricultural and Resources Economics here at NC State University. Dr. Edwards‘ program is aimed at providing agricultural producers, urban water utilities, regulators, environmental advocates, concerned citizens and consumers the economic information they need to make informed water use and management decisions in North Carolina and beyond.
Beyond Benefit-Cost Analysis: The Economics of Solving Water Resource Problems
Remedies to water resource problems like groundwater depletion and water pollution often have high benefit-to-cost ratios but are regularly late and incomplete. The costs encountered in assigning constraints to address the problem are an explanation, but analysis of their role is limited by a lack of systematic data. I present the results of work examining governance institutions in California’s 445 groundwater basins using a new data set to identify factors that influence the adoption of extraction controls. While users in 31 basins have set sustainable extraction limits, at least 20 additional basins are severely and persistently over drafted. Prior to setting sustainable extraction limits, all 51 systems saw similar signals of problematic usage. I document the critical role of transaction costs—associated with creating and implementing remedies—in explaining the variation in responses. I then move beyond the empirical case to discuss how this work informs our understanding of other water resource challenges, like reducing nutrient discharge and preserving riparian ecosystems.