**3. Groundwater property rights**

Given the difficulty of establishing clear groundwater property rights, scarcity rents are frequently difficult to be estimated. Ignoring scarcity rents should imply that groundwater prices could be too low and extraction might be above the socially optimal level. From this, the main conclusion is that, in the absence of optimal dynamic management of common pool groundwater resources, or, alternatively, in the presence of a competitive extraction regime, ignoring scarcity rents, could result in inefficient pricing and misallocation of resources.

Just in the case, there is no optimal dynamic management of common pool groundwater resources, or, alternatively, in the presence of a competitive extraction regime, ignoring scarcity rents results in inefficient pricing competitive extraction regime, inefficient pricing, and misallocation of the resource.

From this, an interesting question might be pointed out: How could be explained that a competitive dynamic solution of groundwater exploitation is almost identical (in terms of derived social welfare) to the efficient management solution, in the way it is claimed by the GSE effect?

## **3.1 The Gisser-Sánchez effect**

 The GSE explains a contradictory empirical result, present and persisting in the dynamic solutions of groundwater exploitation under different extraction regimes (since 1980) [1]. In spite of the fact that depletion of aquifers is a major threat to many freshwater ecosystems all over the world, the social benefits from managing groundwater are numerically insignificant. It needs to be pointed out that GSE encompasses to a general rule, and then the role and scope of water management are severely limited. It is also essential to point out that, even if implementing optimal extraction is not going to be costless. In this section, a review of [38] is introduced

about the theoretical and empirical attempts to address the GSE and discuss the potential for groundwater management.
