Safe Yield of Aquifers: An Economic Reformulation

Certain concepts of safe yield of ground-water reservoirs have been criticized by hydrologists as ambiguous, pseudohydrologic and overly limited in scope. From the perspective of economics, these difficulties are seen to stem from application of an essentially descriptive (factual) concept to the prescriptive (normative) problem of resource allocation. From the theory of optimal resource allocation in economics, it is shown that ground water basin management becomes an issue of public concern because of the existence of technical conditions which prevent the market mechanism from properly functioning in the allocation of ground water. The rules for allocating ground water implicit in the prescriptive definition of safe yield are addressed to significant issues, problems which are termed external diseconomies in economics. However, these rules are deficient in that they focus on costs of ground water withdrawals while ignoring associated benefits. The objective of maximizing net economic yield (the present value of social benefits minus social costs) is suggested as an alternative to safe yield criteria for ground water basin management.