Analytic game -: theoretic approach to ground-water extraction

The roles of cooperation and non-cooperation in the sustainable exploitation of a jointly used groundwater resource have been quantified mathematically using an analytical game-theoretic formulation. Cooperative equilibrium arises when groundwater users respect water-level constraints and consider mutual impacts, which allows them to derive economic benefits from ground-water indefinitely, that is, to achieve sustainability. This work shows that cooperative equilibrium can be obtained from the solution of a quadratic programming problem. For cooperative equilibrium to hold, however, enforcement must be effective. Otherwise, according to the commonized costs-privatized profits paradox, there is a natural tendency towards non-cooperation and non-sustainable aquifer mining, of which overdraft is a typical symptom. Non-cooperative behavior arises when at least one ground-water user neglects the externalities of his adopted ground-water pumping strategy. In this instance, water-level constraints may be violated in a relatively short time and the economic benefits from ground-water extraction fall below those obtained with cooperative aquifer use. One example illustrates the game theoretic approach of this work. (C) 2004 Elsevier B.V. All rights reserved.