THE DETERMINATION OF AN OPTIMAL POLICY FOR PROTECTING GROUND WATER QUALITY1

ABSTRACT: An analytical framework is presented that identifies the tradeoffa that a regional authority desiring to enhance ground water quality is confronted with as it strives to balance the preferences of farmers and households while endeavoring to maximize net regional welfare. The basic rule developed indicates that the regional authority must choose a policy whereby any increase (decrease) in regional income is just equal to the decrease (increase) in net benefits to households.