(Anti-)Coordination Problems with Scarce Water

Résumé

This paper extends the previous literature on differential games of groundwater pumping in two directions. First, we take up the often claimed necessity to model the physical interactions between groundwater and rainwater, instead of analyzing these water sources as non-connected systems, and confirm the crucial importance of this hydrological aspect. Next, considering strategic interaction between resource users, we show that there may exist multiple equilibria, which may occur simultaneously. Moreover, we prove that farmers may opt for opposite irrigation strategies, one group choosing groundwater extraction, the other rainwater storage. This is a typical feature of anti-coordination games. Open-loop and feedback equilibrium have been computed to characterize these equilibria.

Codes JEL