Sharing a groundwater resource in a context of regime shifts

We study the occurrence of shocks in a common groundwater resource problem using a differential game. In particular, we use Rubio and Casino's adaptation of the Gisser and Sánchez model where we introduce a sudden change in the dynamics of the resource, namely a decrease in the recharge rate of the aquifer. We compare the pareto optimal solution with open-loop and feedback equilibria. First, we show analytically how different solutions, at the steady state, depend on the intensity of the shock. Moreover, we show that the cost and the strategic effects are decreasing functions of the intensity of the shock, i.e. that all the solutions get closer at the steady state for more intense shocks. We finally apply the game to the particular case of the Western La Mancha aquifer. The aim of this application is to estimate how shocks influence the inefficiency of open loop and feedback strategies in terms of welfare. We show that this inefficiency decreases the earlier the shock occurs or the higher the intensity of the shock

Farm-level adaptation to climate change: The case of the Loam region in Belgium

Few studies have addressed the topic of farmers' adaptation to climate change from a multidisciplinary perspective, because of the difficulty in assessing their impacts. In view of the growing concern in the agricultural sector on this issue, we analyzed farm-level adaptation through arable land-use changes in the specific case of the Loam region in Belgium. With this aim, we used an agro-economic model which considered 20-year series of current and projected simulated yields with and without considering additional farming practices to reduce crop stress, such as irrigation and soil and water conservation techniques. Agronomic results show that climate change will negatively affect summer crop yields, particularly sugar beet and potatoes. However, we also show that adaptation to climate change through land-use changes can compensate for crop yield losses and lead to utility gains. These are obtained by reducing the share of land allocated to summer crops and barley and by increasing the surface allocated to less vulnerable crops such as winter wheat. Finally, irrigation practices would not be justified in the Loam region under climate change, since their use would incur important financial costs for farmers

Strategic investment decisions under the nuclear power debate in Belgium [WP]

In view of the current nuclear power debate in Belgium, we analyze how uncertainty about a nuclear phase-out, coupled with the implementation of renewable energy subsidies and nuclear taxes, affects investment capacity and productivity decisions by Belgian electricity suppliers. To achieve this goal, considering the key characteristics of the Belgian market, we build a Stackelberg closed-loop (two-stage) equilibrium model in which investment decisions are made in a first stage under uncertainty regarding a nuclear phase-out, and productivity decisions are subsequently made in a second stage in a c ertainty environment. Our analysis indicates that, regardless of subsidies, an increase in the probability of nuclear license extension results in lower levels of investment - primarily in renewable energy -, lower total production and a higher electricity price. We also show that the implementation of renewable energy subsidies reduces the effect of an increase in probability of nuclear license extension on producer’s decisions regarding expanded capacity and on total profits in the market

Stackelberg competition in groundwater resources with multiple uses

We study a problem of exploitation of a groundwater resource, mainly used for irrigation, in which a water agency is needed in order to manage an exceptional and priority extraction of water for an alternative/new use (e.g. domestic water). To this goal, we build a two-stage discrete Stackelberg game in which the leader (the water agency) just intervenes when the new use takes place (in the second stage) and the follower is a representative agent of the regular users of the aquifer, i.e. the agricultural users. We study two types of Stackelberg equilibrium, which can arise depending on the agents' commitment behavior, namely openloop commitment) equilibrium and feedback (non-commitment) equilibrium. We analyze and compare extraction behaviors of the different agents for the different equilibria and the consequences of these extraction behaviors for the final state of the resource and the agents'profits. For some hypotheses on the parameters, theoretical results show that commitment strategies lead to higher stock levels than non-commitment strategies when the leader's weight assigned to the profits from the agricultural use is lower or equal than the one assigned to the profits from the non-agricultural use. However, performing numerical simulations relaxing previous economic assumptions, we show that there are situations in which non-commitment strategies could be more favorable than commitment strategies not only in terms of final stock of the resource but also in terms of users' profits

Commitment vs. noncommitment behaviors in natural resource conflicts: A case study of groundwater resources

We examine the problem of natural resource exploitation when an exceptional extraction of a resource (groundwater) is needed and devoted to a different use than its regular use. The study applies a two-stage Stackelberg game to examine the strategic behavior of players who compete for water. The leader, with varying weights assigned to the different uses and environmental concern, is the manager of the new (nonregular) resource use, who only intervenes in the second stage of the game. The follower is a regular (agricultural) resource user. We examine the crucial resource of groundwater, introducing two types of Stackelberg equilibria (open-loop and feedback) that can arise depending on agents' commitment behavior. We compare the extraction behaviors of the leader and the follower for the two equilibria and the effects on the final state of the resource and agents' profits. Unexpectedly, we demonstrate that situations can occur in which noncommitment strategies could be more favorable than commitment strategies in terms of the final aquifer stock and the regular user's profits. To avoid that noncommitment strategies are implemented in these circumstances, the weights assigned by the leader to the different uses will play an important rol

Groundwater resource management subject to droughts : analysis of adaptation strategies

La gestion d'une ressource en eau souterraine utilisée pour l'irrigation est un phénomène dépendant de plusieurs facteurs et concernant différents acteurs (utilisateurs et gestionnaire). En cas d'aléa climatique comme la sécheresse, gérer une ressource devient un problème plus complexe. Il est justement important de mieux comprendre et d'anticiper les sécheresses car ils peuvent avoir des impacts significatifs sur l'activité économique agricole et sur les niveaux de la ressource. Pour cela, le type d'information dont disposent les utilisateurs et/ou les gestionnaire est essentiel. Dans les chapitres 2 et 3, nous analysons l'impact d'une sécheresse "hydrologique" sur la gestion optimale de la ressource, avant et après son arrivée. Dans le chapitre 2, nous montrons comment le gestionnaire de la ressource peut s'adapter le mieux possible à cette sécheresse selon l'information dont il dispose. Dans le chapitre 3, nous montrons que la prise en compte des interactions stratégiques et dynamiques entre les utilisateurs de la ressource entraîne une exploitation moins efficace de la ressource. Nous appliquons les modèles des chapitres 2 et 3 à l'aquifère La Mancha Occidentale au Sud de l'Espagne. Dans le chapitre 4, nous analysons l'impact d'une sécheresse "agronomique" sur la gestion optimale d'une exploitation agricole située dans la zone de la Beauce centrale, en France. Nous prenons en compte des informations de caractère hydrologique, agronomique et économique. En particulier, nous étudions l'impact d'une année sèche sur la valeur ajoutée de l'exploitation et sur la ressource en eau utilisée. De plus, nous nous intéressons au comportement stratégique que les agriculteurs peuvent avoir en année sèche, que ce soit sans ou avec restrictions des usages de l'eau. Nous montrons qu'une politique de régulation est nécessaire pour éviter la surexploitation de la nappe en année sèche.The management of a groundwater resource used for irrigation is a phenomenon that depends on several factors and concerning various actors (users and manager). Moreover, the resource can be subject to droughts. In this case, the management of the resource becomes a more complex problem. Adaptation to droughts is important because they can have significant impacts on agriculturalactivity and on the water table of the resource. This adaptation hinges crucially on the information available to the manager and the resource users. In chapters 2 and 3, we analyze the impact of an hydrological drought on the optimal management of the resource, before and after its arrival. In particular, in chapter 2, we show how the manager can adapt as good as possible to this drought according to the nature of information he has. In chapter 3, we are show that taking into account strategic and dynamic interactions between the users of the ressource leads to less efficient resource use. We apply models of chapters 2 and 3 to the aquifer Western La Mancha, in Spain. In chapter 4, we study the impact of an agronomic drought on the optimal management of a farm in the area of Central Beauce, in France. We take into account hydrological, agronomic and economic informations. In particular, we analyze the impact of a dry period on the annual benefits of the farm and on the groundwater resource level. Furthermore, we study optimal strategic behavior of farmers in a dry year, whether they are subject to water restrictions or not. We show that a regulation policy is necessary to avoid the overexploitation of the ressource in a dry year

Exploring investment potential in a context of nuclear phase-out uncertainty: Perfect vs. imperfect electricity markets

In view of the ongoing nuclear power debate in Europe, we analyze how uncertainty about a nuclear phase-out affects investment capacity decisions by Belgian electricity suppliers depending on the type of market structure considered. To achieve this goal, we build a structural model and solve it by using game-theoretic and optimization approaches, in order to consider the different types of market structure, namely oligopoly (simplified to a duopoly in this case), and the two extremes of the competition spectrum, i.e., monopoly and perfect competition. We show that higher levels of investment in new electricity generation capacity are reached with decreasing probability of nuclear license extension and/or with higher levels of competition in the market. Moreover, investments in perfectly competitive markets are less influenced by changes in the probability of future nuclear license extension, resulting in a more stable long-term investment climate. However, the consideration of possible changes in market structure and gradual nuclear phase-out is crucial in order to not overestimate investment potential in Belgium

Farm-level adaptation to climate change: The case of the Loam region in Belgium

status: publishe

A dynamic model of irrigation and land-use choice: application to the Beauce aquifer in France

International audienceWe set up a model of land-use and irrigation water choices to assess the impact of dry weather conditions and possible restriction policies on farmers' payoffs in the Beauce area in France. Given the informational context, we construct a dynamic two-period model in which farmers make conjectures on the water abstraction by other users and take into account variations in the height of the water table. We solve the problem using dynamic programming. We simulate different restriction policies, proposed in the literature and tested in the field. We show that these restrictions, although efficient with respect to hydrological criteria, result in serious economic losses for the farmers