An Economic Analysis of Shallow Groundwater Management for Nature Conservation and Agricultural Production

Lowering of shallow groundwater levels in agricultural areas with ecological value leads to desiccation of ecosystems. The aim of this paper is to develop a model to study the trade-offs between the agricultural production value and the monetary value of the ecological benefits of agricultural nature management as a result of changes in shallow groundwater levels. It shows that socially optimal groundwater levels depend on: (1) the agricultural production value; (2) the monetary value of nature; (3) the soil type and vegetation; and (4) the relative share of agricultural area with ecological value in total agricultural area.