Optimal Groundwater Extraction and Water Recycling


Dr. James Roumasset, Water Resources Research Center/Economics, University of Hawaii at Manoa (UH)


National Institute for Water Resources, Water Resources Research Institute Program


3/1/2009 - 2/28/2011


Water scarcity has long been an important issue in many regions around the world and the threat of climate change has recently brought it further to the forefront of policy discussions. On Oahu (Hawaii), for example, some experts believe that the island’s groundwater resources will be “committed” within the next twenty or thirty years (Wilson Okamoto Corp. 2008). However, such studies are based on water-use projections and estimates of sustainable yield that often do not consider efficient demand conservation or improved supply-side management. Management strategies such as expansion of reservoirs, implementation of wastewater recycling, improved conjunctive use of groundwater and surface water, new pricing structures, voluntary or mandatory quantity restrictions, and watershed conservation all serve to slow the onset of groundwater scarcity as demand for water continues to grow. Analyses in the engineering literature have begun to incorporate a wide range of management instruments, such that a portfolio of demand- and supply-side strategies are chosen in conjunction with groundwater extraction (Jenkins et al. 2001, Draper et al. 2003, Jenkins et al. 2004, Wilkinson and Groves 2006). However, these studies do not attempt to solve for the vectors of management instruments that maximize the present value to the users. That task requires the application of public and resource economics. At the same time, little attention has been paid in the resource-economics literature to recycled wastewater and its potential role as an intermediate or sector-specific backstop. Since each demand sector requires a particular quality of water, recycled wastewater can potentially serve as a sector-specific backstop resource.

Our research has addressed the problem of integrating a water-recycling program with groundwater management in an economic-welfare-maximizing framework. To investigate the principle of optimal groundwater extraction in conjunction with wastewater recycling and seawater desalination in a two-sector (household/potable and nonhousehold/ non-potable) framework, we developed a dynamic groundwater economics model. For identical satellite treatment facilities around the island, i.e., a constant amortized unit cost of recycled water, we numerically solved the optimization model. The simulation results provided optimal groundwater extraction, wastewater recycling, and seawater desalination quantities in every future period; the trajectories of the aquifer-head level; the optimal implementation of groundwater substitution; and the price paths that would induce efficient groundwater use.

Click here to view the results