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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
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: Next, assume that the county has 20 units of groundwater left in the local aquifer. Here, instead, the discount rate is 10%. (round the numbers to one decimal point) 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 present value of the marginal user cost in this case? \$ What is the value of the marginal user cost in the second year in this case? \$ Question 4 6pts Finally, assume that the county is next to the ocean and can use desalination technologies to produce water. Desalination costs $12. How much water should the county produce from desalination in the second year? AF How much water should the county produce from groundwater in the second year? AF 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: Next, assume that the county has 20 units of groundwater left in the local aquifer. Here, instead, the discount rate is 10%. (round the numbers to one decimal point) 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 present value of the marginal user cost in this case? \$ What is the value of the marginal user cost in the second year in this case? \$ Question 4 6pts Finally, assume that the county is next to the ocean and can use desalination technologies to produce water. Desalination costs $12. How much water should the county produce from desalination in the second year? AF How much water should the county produce from groundwater in the second year? AF
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