Assume that county A overlies an aquifer that has been depleted over the years. The county is deciding how to allocate their remaining groundwater over the next two years. You are hired by the county to advise them on the amount of water that they should withdraw in each year. The marginal benefit and marginal cost curves for groundwater per year for the county are given by the figure below: Provide policy recommendations for the following scenarios: First, assume that the county has 50 units of groundwater left in the local aquifer and the discount rate is zero. How many units of water should the county withdraw in the first period? AF How many units of water should the county withdraw in the second period? AF What is the marginal user cost? \$ Second, assume that the county has 20 units of groundwater left in the local aquifer, and the discount rate is zero. How many units of water should the county withdraw in the first period? AF How many units of water should the county withdraw in the second period? What is the marginal user cost in this case? \$ What is the marginal user cost in this second period? \$ What is the magnitude of the net benefits of using water in the first year? \$ What is the magnitude of the net benefits of using water in the second year? \$ Assume that county A overlies an aquifer that has been depleted over the years. The county is deciding how to allocate their remaining groundwater over the next two years. You are hired by the county to advise them on the amount of water that they should withdraw in each year. The marginal benefit and marginal cost curves for groundwater per year for the county are given by the figure below: Provide policy recommendations for the following scenarios: First, assume that the county has 50 units of groundwater left in the local aquifer and the discount rate is zero. How many units of water should the county withdraw in the first period? AF How many units of water should the county withdraw in the second period? AF What is the marginal user cost? \$ Second, assume that the county has 20 units of groundwater left in the local aquifer, and the discount rate is zero. How many units of water should the county withdraw in the first period? AF How many units of water should the county withdraw in the second period? What is the marginal user cost in this case? \$ What is the marginal user cost in this second period? \$ What is the magnitude of the net benefits of using water in the first year? \$ What is the magnitude of the net benefits of using water in the second year? \$
