Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/204321
Authors: 
Hansen, Lars Gårn
Jensen, Frank
Amundsen, Eirik S.
Year of Publication: 
2011
Series/Report no.: 
FOI Working Paper 2011/3
Abstract: 
In many developing countries, groundwater is a common pool resource which is potentially subject to the tragedy of the commons if water extraction is not adequately regulated. However, in these countries, the regulatory infrastructure is often too weak to allow detailed monitoring of individual groundwater extraction. For this reason, classical public intervention instruments, such as consumption fees or tradable quotas, are infeasible. Here we present a theoretical foundation for a new public regulatory instrument that can potentially generate the same efficiency inducing incentives as fees and tradable quotas, but without their information and monitoring requirements. The instrument we propose is a tax based on aggregate extraction, rather than individual extraction measures.
Subjects: 
Developing countries
groundwater use
moral hazard problems
taxes
Document Type: 
Working Paper

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