Combining economic policy instruments with desalinisation to reduce overdraft in the Spanish Alto Guadalentín aquifer

Abstract

This paper analyses the cost-effectiveness of combining several economic policy instruments to address the problem of non-renewable pumping in the Alto Guadalentín aquifer in southeastern Spain, one of the most extreme cases of aquifer depletion in Europe. Our results show that all instruments have significant economic impacts. However, the future availability of desalinisation would notably mitigate these impacts, as farmers can substitute groundwater with desalinised water. Although a complete ban on non-renewable pumping and an environmental tax on withdrawals imply the lowest level of public expenditure, they are very unpopular and have a large political cost. The buyback of groundwater rights and the subsidisation of desalinisation in exchange for reducing withdrawals are likely to be much better received by farmers, as their cost would be charged to the public budget. A combination of instruments would split the cost of aquifer recovery between farmers and the administration and would therefore possibly not meet with as much opposition from stakeholders.