Christopher A. Wada

Ordering Renewable Resources: Groundwater, Recycling, and Desalination

Abstract Optimal recycling of minerals can be thought of as an integral part of the theory of the mine. In this paper, we consider the role that wastewater recycling plays in the optimal extraction of groundwater, a renewable resource. We develop a two-sector dynamic optimization model to solve for the optimal trajectories of groundwater extraction and water recycling. For the case of spatially increasing recycling costs, recycled water serves as a supplemental resource in transition to the steady state. For constant unit recycling cost, recycled wastewater is eventually used as a sector-specific backstop for agricultural users, while desalination supplements household groundwater in the steady state. In both cases, recycling water increases welfare by shifting demand away from the aquifer, thus delaying implementation of costly desalination. The model provides guidance on when and how much to develop resource alternatives.

Estimating Cost-Effectiveness of Hawaiian Dry Forest Restoration Using Spatial Changes in Water Yield and Landscape Flammability under Climate Change

Abstract: Resource managers increasingly seek to implement cost-effective watershed restoration plans for multiple ecosystem service benefits. Using locally adapted ecosystem service tools and historical management costs, we quantified spatially explicit management costs and benefits (in terms of groundwater recharge and landscape flammability) to assist a state agency in evaluating cobenefits for a predefined restoration scenario (focused on biodiversity benefits) and to prioritize an expanded restoration scenario in the state-managed Pu‘u Wa‘awa‘a watershed ( Hawai‘i) now and under the Representative Concentration Pathway (RCP) 8.5 midcentury climate scenario. Restoring all available areas increases recharge by ∼1.74 million m3/yr (5% of recharge over the entire watershed) under the current climate and does not meaningfully change recharge under RCP 8.5 midcentury, whereas climate change decreases recharge by ∼50%. For landscape flammability, climate change increases the median and maximum probability of fire occurrence across all land use scenarios, and full restoration results in the greatest reduction in landscape flammability under both current and RCP 8.5 midcentury climate scenarios. We demonstrate that location and type of forest restoration influence overall cost-effectiveness of restoration, providing insights for landscape planning for ecosystem services under a limited budget. Across all scenarios, capturing potential benefits at low elevations requires greater expenditures (

Islands of Sustainability in Time and Space

13,161/ ha) than at high elevations (

Bringing multiple values to the table: assessing future land-use and climate change in North Kona, Hawaiʻi

5,501/ ha) due mainly to the substantial costs of removing Pennisetum setaceum (fountain grass), the dominant land cover below 1,000 m. If management focuses on groundwater recharge only, the most cost-effective areas occur at high elevations (>1,000 m), with ample fog interception, although recharge benefits decline across the landscape under RCP 8.5 midcentury. Focusing instead on cost-effective landscape flammability reduction as the primary management objective shifts emphasis toward dry low-elevation areas under the current climate. However, under the RCP 8.5 midcentury scenario, the most cost-effective areas for flammability management shift toward higher elevations with greater potential overlap with recharge benefits.

Integrated Groundwater Resource Management

We review the economics perspective on sustainable resource use and sustainable development. Under standard conditions, dynamic efficiency leads to sustainability of renewable resources but not the other way around. For the economic-ecological system as a whole, dynamic efficiency and intergenerational equity similarly lead to sustainability, but ad hoc rules of sustainability may well lead to sacrifices in human welfare. We then address the challenges of extending economic sustainability to space as well as time and discuss the factors leading to optimal islands of preservation regarding renewable resources. Exogenous mandates based on moral imperatives such as self-sufficiency and strong sustainability may result in missed win-win opportunities that could improve both the economy and the environment, as well as increase social welfare across generations.

Economics of Groundwater

As ecosystem service assessments increasingly contribute to decisions about managing Earth’s lands and waters, there is a growing need to understand the diverse ways that people use and value landscapes. However, these assessments rarely incorporate the value of landscapes to communities with strong cultural and generational ties to place, precluding inclusion of these values— alongside others—into planning processes. We developed a process to evaluate trade-offs and synergies in ecosystem services across land-use scenarios and under climate change in North Kona, Hawaiʻi, a tropical dry ecosystem where water, fire, biodiversity, and cultural values are all critical considerations for land management decisions. Specifically, we combined participatory deliberative methods, ecosystem service models, vegetation surveys, and document analysis to evaluate how cultural services, regulating services (groundwater recharge, landscape flammability reduction), biodiversity, and revenue: (1) vary across four land-use scenarios (pasture, coffee, agroforestry, and native forest restoration) and (2) are expected to vary with climate change (representative concentration pathway (RCP) 8.5 mid-century scenario). The native forest restoration scenario provided high cultural, biodiversity, and ecosystem service value, whereas coffees strongest benefit was monetary return. The agroforestry scenario offered the greatest potential in terms of maximizing multiple services. Pasture had relatively low ecological and economic value but, as with native forest and agroforestry, held high value in terms of local knowledge and cultural connection to place. Climate change amplified existing vulnerabilities for groundwater recharge and landscape flammability, but resulted in few shifts in the ranking of land-use scenarios. Our results demonstrate that cultural services need not be sacrificed at the expense of other management objectives if they are deliberately included in land-use planning from the start. Meaningfully representing what matters most to diverse groups of people, now and under a changing climate, requires greater integration of participatory methods into ecosystem service analyses.

Payments for Watershed Services as Adaptation to Climate Change: Upstream Conservation and Downstream Aquifer Management

General principles of groundwater management for a single aquifer are extended to the management of multiple water resources, including additional aquifers, recycled wastewater, and desalinated seawater. Optimal groundwater extraction can be incentivized by pricing according to the Pearce equation for renewable resources, although the standard version of the equation must be modified in certain situations, e.g. to accommodate corner solutions or governance costs. Groundwater management and pricing must be coordinated with the management of watershed and related resources lest the benefits of conservation are squandered by wasting the water saved. Joint optimization also provides the basis for correctly pricing ecosystem services such as groundwater recharge. From the models and examples discussed, one can conclude that a systems approach is necessary, and ad hoc rules-of-thumb such as maximum-sustainable-yield are welfare reducing. Inasmuch as actual groundwater management may be far from efficient, the Gisser-Sanchez effect notwithstanding, we discuss the problem of optimal resource governance.

Cost Optimal Joint Management of Interdependent Resources: Groundwater vs. Kiawe (Prosopis pallida)

This article reviews economic concepts relevant to groundwater management. It begins by discussing how groundwater resource management has evolved from sustainable yield to dynamic optimization. General management principles developed through the solution of a single-aquifer optimization problem are then extended to the management of multiple resources including additional groundwater aquifers, surface water, recycled wastewater, and upland watersheds. However, in many parts of the world, especially in agriculture, groundwater is characterized as a common-pool resource. Therefore, the open-access equilibrium for groundwater and the conditions under which the Gisser–Sanchez effect (the result that the present value generated by competitive resource extraction and that generated by optimal control of groundwater are nearly identical) is valid are also discussed. From the models and examples discussed, one can conclude that optimization across any number of dimensions (e.g., space, time, and quality) is driven by a system shadow price, and augmenting groundwater with any number of alternatives lessens scarcity and increases welfare if timed appropriately.

Incentivizing interdependent resource management: watersheds, groundwater, and coastal ecology

Economically optimal groundwater extraction allocates water over space and time to its highest and best social use. But optimal management of water resources also requires optimal investment in watershed capital, even as the climate is changing. We augment a standard coastal groundwater management model with stock-dependent extraction costs to include recharge-enhancing natural and produced capital whose depreciation can be offset by investment in each period. In some parts of the world, including Hawaii, results from climate models suggest that mean annual rainfall will decrease but that the frequency of storms may increase. In the case of coastal aquifers, the implication is that runoff to the ocean will increase and groundwater recharge will decrease. Accordingly, the groundwater-extraction/watershed-investment problem is further extended to allow natural recharge to decline in response to climate change. The tendency of falling recharge is partially offset by increasing investment in watershed capital. If precipitation decreases sufficiently, however, it may be that optimal conservation eventually declines as the cost of increasing groundwater recharge correspondingly increases. Thus adaptation to climate change may involve an initial stage of increased conservation investment followed by controlled depreciation of natural capital. That is, instruments of adaptation may become increasingly ineffective as climate change progresses.

Energy, Backstop Endogeneity, and the Optimal Use of Groundwater

Local and global changes continue to influence interactions between groundwater and terrestrial ecosystems. Changes in precipitation, surface water, and land cover can affect the water balance of a given watershed, and thus affect both the quantity and quality of freshwater entering the ground. Groundwater management frameworks often abstract from such interactions. However, in some cases, management instruments can be designed to target simultaneously both groundwater and an interdependent resource such as the invasive kiawe tree (Prosopis pallida), which has been shown to reduce groundwater levels. Results from a groundwater-kiawe management model suggest that at the optimum, the resource manager should be indifferent between conserving a unit of groundwater via tree removal or via reduced consumption. The model’s application to the Kona Coast (Hawai‘i) showed that kiawe management can generate a large net present value for groundwater users. Additional data will be needed to implement full optimization in the resource system.