Energy, Backstop Endogeneity, and the Optimal Use of Groundwater

To meet the growing demand for freshwater, many regions have increased groundwater pumping in recent years, resulting in declining groundwater levels worldwide. A promising development to address these declines is technical change regarding groundwater substitutes such as desalination and wastewater recycling. However, because these technologies are energy intensive, optimal implementation also depends on future energy price trends. We provide an operational model for the case of reverse-osmosis seawater desalination in Hawai‘i.