This paper explores how analytical hydrologic models can inform the effective design and choice of policy instruments to manage groundwater quality by coupling a social-planner’s problem of optimal groundwater-quality management with analytical solutions from the hydrology literature.
A theoretical analysis is performed in order to characterize the properties of an optimal emissions policy. The model is then applied in a numerical analysis of groundwater contamination by chloride from highway deicers, demonstrating the relevance of the theoretical results to practical management settings. This analytical approach can help determine which policy instruments are likely to be effective in controlling groundwater pollution, especially if costly numerical groundwater models are not available for the aquifer in question. Unlike previous economic studies of groundwater contamination, this approach defines optimal emissions policies as a function of geophysical parameters employed by hydrologists such as distance between source and sink, groundwater velocity, and aquifer dispersivity. The theoretical section of this paper also demonstrates that the relationship between geophysical parameters and optimal emissions levels may be ambiguous.
