RT Journal Article
SR Electronic
T1 Valuing Groundwater Recharge in an Urban Context
JF Land Economics
JO Land Econ
FD University of Wisconsin Press
SP 234
OP 252
DO 10.3368/le.83.2.234
VO 83
IS 2
A1 Cutter, W. Bowman
YR 2007
UL http://le.uwpress.org/content/83/2/234.abstract
AB Urbanization often creates waterrelated externalities such as increased flooding and decreased groundwater recharge. Decreased recharge can lead to the diminution of potentially valuable groundwater. Groundwater’s ability to buffer water-supply shocks may be a substantial component of the value of groundwater stock. I argue that in urban contexts, autoregressive rather than i.i.d. stochastic processes are a better characterization of water supply processes. Data for the Los Angeles area suggests that an autoregressive process is a better approximation of water supply processes than alternative processes and produces economically and statistically significantly different estimates of buffer and groundwater stock values. (JEL Q25, Q32)