A 2019 published study examined how changes in well capacity affect the monetary gains of managing a shared groundwater resource. The study developed a model of groundwater use that allows changes in aquifer saturated thickness to affect both pumping costs and the well capacity (and therefore water productivity) at nearby wells. Agricultural profitability over time with and without coordinated conservation efforts were compared. As the connection between saturated thickness and well capacity becomes stronger, the economic gains to coordinated groundwater management increase in an economically significant way.
Publication: Manning, D.T, and J.F. Suter (2019). Production Externalities and the Gains from Management in a Spatially Explicit Aquifer. Journal of Agricultural and Resource Economics 44(1): 194-211. https://econpapers.repec.org/article/agsjlaare/281320.htm.